FORM 10-QSB


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20552

(Mark One)

[X]           QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended            June 30, 1997
                               -----------------------------------

                                       OR

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

For the transition period from ____________ to _______________

Commission File No.  0-26248

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

Ohio                                                           34-1800830
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

2 East High Street
London, Ohio                                                        43140
(Address of principal                                            (Zip Code)
executive office)

Registrant's telephone number, including area code: (614)   852-0787

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
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 11, 1997, the latest  practicable date, 510,160 of the registrant's
common shares, without par value, were issued and outstanding.









                               Page 1 of 14 pages

<PAGE>



                          London Financial Corporation


                                      INDEX

                                                                     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               6

              Management's Discussion and Analysis of
              Financial Condition and Results of
              Operations                                               8


PART II -  OTHER INFORMATION                                          13

SIGNATURES                                                            14



<PAGE>


<TABLE>
<CAPTION>

                          London Financial Corporation


                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                        (In thousands, except share data)



                                                                      June 30,     September 30,
         ASSETS                                                          1997              1996
<S>                                                                      <C>             <C>
Cash and due from banks ..........................................   $    982          $    319
Interest-bearing deposits in other financial institutions ........      2,446             2,324
                                                                     --------          --------
         Cash and cash equivalents ...............................      3,428             2,643

Investment securities designated as available for sale - at market        281               220
Investment securities - at amortized cost, approximate market
  value of $502 and $1,991 at June 30, 1997
  and September 30, 1996, respectively ...........................        500             2,000
Mortgage-backed securities - at cost, approximate market
  value of $3,685 and $3,944 at June 30, 1997 and
  September 30, 1996, respectively ...............................      3,680             4,032
Loans receivable - net ...........................................     29,470            27,031
Office premises and equipment - at depreciated cost ..............        362               354
Stock in Federal Home Loan Bank - at cost ........................        275               261
Accrued interest receivable ......................................        179               178
Prepaid expenses and other assets ................................         65                21
Deferred federal income taxes ....................................       --                  77
                                                                     --------          --------

         Total assets ............................................   $ 38,240          $ 36,817
                                                                     ========          ========

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits .........................................................   $ 29,587          $ 28,195
Advances from the Federal Home Loan Bank .........................        800               300
Other liabilities ................................................        149               279
Accrued federal income taxes .....................................        149               136
Deferred federal income taxes ....................................         36              --
                                                                     --------          --------
         Total liabilities .......................................     30,721            28,910

Shareholders' Equity
  Common shares - authorized 5,000,000 shares without par value;
    529,000 shares issued ........................................       --                --
  Additional paid-in capital .....................................      4,910             4,910
  Shares acquired by Employee Stock Ownership Plan ...............       (423)             (423)
  Shares acquired by Management Recognition Plan .................       (315)             --
  Retained earnings - substantially restricted ...................      3,585             3,416
  Unrealized gains on securities designated as available for
    sale, net of related tax effects .............................         44                 4
  Less 13,840 treasury shares - at cost ..........................       (282)             --
                                                                     --------          --------
         Total shareholders' equity ..............................      7,519             7,907
                                                                     --------          --------

         Total liabilities and shareholders' equity ..............   $ 38,240          $ 36,817
                                                                     ========          ========

</TABLE>




                                                         3



<PAGE>


<TABLE>
<CAPTION>

                          London Financial Corporation


                       CONSOLIDATED STATEMENTS OF EARNINGS

                        (In thousands, except share data)


                                                            Nine months ended      Three months ended
                                                                June 30,                 June 30,
                                                             1997     1996            1997     1996
<S>                                                          <C>       <C>             <C>      <C>
Interest income
  Loans ................................................   $1,773   $1,783          $  608   $  588
  Mortgage-backed securities ...........................      175       85              59       31
  Investment securities ................................       50       23               7       10
  Interest-bearing deposits and other ..................      115      172              46       89
                                                           ------   ------          ------   ------
         Total interest income .........................    2,113    2,063             720      718

Interest expense
  Deposits .............................................    1,047    1,123             356      351
  Borrowings ...........................................       31       21              14        7
                                                           ------   ------          ------   ------
         Total interest expense ........................    1,078    1,144             370      358
                                                           ------   ------          ------   ------

         Net interest income ...........................    1,035      919             350      360

Other operating income .................................       45       45              14        7

General, administrative and other expense
  Employee compensation and benefits ...................      332      309             127      101
  Occupancy and equipment ..............................       50       53              17       18
  Federal deposit insurance premiums ...................       28       63               5       20
  Franchise taxes ......................................       60       34              28       11
  Data processing ......................................       42       44              14       15
  Other ................................................      183      117              56       50
                                                           ------   ------          ------   ------
         Total general, administrative and other expense      695      620             247      215
                                                           ------   ------          ------   ------

         Earnings before income taxes ..................      385      344             117      152

Federal income taxes
  Current ..............................................       36      110              12       41
  Deferred .............................................       92     --                24     --
                                                           ------   ------          ------   ------
         Total federal income taxes ....................      128      110              36       41
                                                           ------   ------          ------   ------

         NET EARNINGS ..................................   $  257   $  234          $   81   $  111
                                                           ======   ======          ======   ======

         EARNINGS PER SHARE ............................   $  .54      N/A          $  .17   $  .23
                                                           ======   ======          ======   ======



</TABLE>





                                                         4


<PAGE>


<TABLE>
<CAPTION>
                          London Financial Corporation


                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       For the nine months ended June 30,
                                 (In thousands)


                                                                                      1997          1996
<S>                                                                                   <C>            <C>
Cash flows provided by (used in) operating activities:
  Net earnings for the period ..................................................   $   257       $   234
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Amortization of deferred loan origination fees .............................       (64)          (76)
    Depreciation and amortization ..............................................        21            19
    Federal Home Loan Bank stock dividends .....................................       (14)          (13)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable ..............................................        (1)          (36)
      Prepaid expenses and other assets ........................................       (44)          (10)
      Other liabilities ........................................................      (130)           28
      Federal income taxes
        Current ................................................................        13           107
        Deferred ...............................................................        92          --
                                                                                   -------       -------
         Net cash provided by operating activities .............................       130           253

Cash flows provided by (used in) investing activities:
  Proceeds from maturity of investment securities ..............................     1,500          --
  Principal repayments on mortgage-backed securities ...........................       347           162
  Purchase of mortgage-backed securities .......................................      --          (2,296)
  Purchase of investment securities ............................................      --          (1,500)
  Principal repayments on loans ................................................     4,107         5,602
  Loan disbursements ...........................................................    (6,482)       (4,684)
  Purchase of office equipment .................................................       (24)           (7)
                                                                                   -------       -------
         Net cash used in investing activities .................................      (552)       (2,723)

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposit accounts ..................................     1,392        (1,814)
  Proceeds from Federal Home Loan Bank advances ................................       500          --
  Proceeds from issuance of common shares ......................................      --           4,487
  Purchase of shares for Management Recognition Plan ...........................      (315)         --
  Purchase of treasury shares ..................................................      (282)         --
  Dividends paid on common shares ..............................................       (88)         --
                                                                                   -------       -------
         Net cash provided by financing activities .............................     1,207         2,673
                                                                                   -------       -------

Net increase in cash and cash equivalents ......................................       785           203

Cash and cash equivalents at beginning of period ...............................     2,643         2,844
                                                                                   -------       -------

Cash and cash equivalents at end of period .....................................   $ 3,428       $ 3,047
                                                                                   =======       =======

Supplemental disclosure of cash flow information: Cash paid during the year for:
    Federal income taxes .......................................................   $    23       $    20
                                                                                   =======       =======

    Interest on deposits and borrowings ........................................   $ 1,076       $ 1,144
                                                                                   =======       =======

Supplemental disclosure of noncash investing activities:
  Unrealized gains on securities designated as available for sale, net .........   $    40       $  --
                                                                                   =======       =======


</TABLE>

                                                         5


<PAGE>



                          London Financial Corporation


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


In October 1995, the Board of Directors of The Citizens Loan and Savings Company
("Citizens")  adopted  a Plan  of  Conversion  (the  "Plan")  providing  for the
conversion of Citizens to the stock form of organization (the "Conversion").  In
connection  with the  Conversion,  Citizens  formed a  holding  company,  London
Financial  Corporation,  ("LFC").  On March 29,  1996,  Citizens  completed  the
Conversion,  in connection  with which  Citizens  issued all of its  outstanding
shares to LFC and LFC issued 529,000  common shares in a  subscription  offering
and  a  community  offering  at  a  price  of  $10.00  per  share  which,  after
consideration of offering  expenses totaling  $380,000,  and shares purchased by
employee benefit plans totaling $423,000,  resulted in net cash proceeds of $4.5
million.  The financial statements for the periods prior to March 1996 are those
of Citizens prior to the Conversion.

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 a 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  consolidated  financial
statements and notes thereto of LFC included in the Annual Report on Form 10-KSB
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 a fair presentation of the consolidated  financial statements have
been  included.  The results of operations  for the three 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  consolidated  financial statements include the accounts of LFC
and Citizens. All significant intercompany items have been eliminated.

3.  Earnings Per Share

Earnings per share for the three and nine month  periods ended June 30, 1997, is
computed  based upon 472,455 and 479,201  weighted-average  shares  outstanding,
respectively,  which in each instance gives effect to a reduction for the 42,320
unallocated  shares  held by the London  Financial  Corporation  Employee  Stock
Ownership Plan (the "ESOP") in accordance with Statement of Position 93-6.

Earnings per share for the three month  period ended June 30, 1996,  is computed
based upon 486,680 weighted-average shares outstanding,  which gives effect to a
reduction  for  the  42,320  unallocated  shares  held by the  London  Financial
Corporation  Employee  Stock  Ownership  Plan (the  "ESOP") in  accordance  with
Statement of Position 93-6.

The  provisions of  Accounting  Principles  Board Opinion No. 15,  "Earnings Per
Share," are not applicable for the nine month period ended June 30, 1996, as LFC
completed the Conversion in March 1996.


                                        6


<PAGE>



                          London Financial Corporation


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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


4.  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  employee  compensation plans. SFAS No. 123 encourages
all entities to adopt a new method of accounting to measure compensation cost of
all employee 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 LFC will  continue  to  account  for  stock-based  compensation
pursuant to  Accounting  Principles  Board  Opinion No. 25 and,  therefore,  the
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 entity 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.



                                        7



<PAGE>



                          London Financial Corporation


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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


4.  Effects of Recent Accounting Pronouncements

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  obligation  for the
liability or is legally released from being the primary obligor.

SFAS No. 125 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  adoption of SFAS No. 125 will have a material
adverse  effect  on  LFC's   consolidated   financial  position  or  results  of
operations.

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. Based upon the provisions
of SFAS No. 128, LFC's basic and diluted  earnings per share for the nine months
ended June 30, 1997,  would have each been $.54.  Basic and diluted earnings per
share for the three months ended June 30, 1997, would have each been $.17.

5.  Reclassifications

Certain  prior  year  amounts  have been  reclassified  to  conform  to the 1997
consolidated financial statement presentation.


















                                        8



<PAGE>



                          London Financial Corporation


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


Forward-Looking Statements

In addition to historical information contained herein, the following discussion
contains  forward-looking  statements  that  involve  risks  and  uncertainties.
Economic  circumstances,  LFC's operations and LFC's 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 LFC'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 and the effect of certain accounting pronouncements.


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

At June 30,  1997,  LFC had total assets of $38.2  million,  an increase of $1.4
million,  or 3.9%, over the September 30, 1996 total. The increase in assets was
funded primarily from an increase in deposits of approximately  $1.4 million and
a $500,000  increase in Federal Home Loan Bank  advances,  which were  partially
offset by a $388,000 decrease in shareholders' equity.

Investment securities and mortgage-backed  securities decreased by $1.8 million,
to a total  of $4.5  million  at June  30,  1997,  reflecting  the  maturity  of
investment   securities  totaling   approximately  $1.5  million  and  principal
repayments on mortgage-backed securities of $347,000.

Loans receivable  increased $2.4 million, or 9.0%, as loan disbursements of $6.5
million exceeded  principal  repayments of $4.1 million.  Loans disbursed during
the 1997 period exceeded those of the comparable 1996 period by $1.8 million, or
38.4%.

At June 30, 1997,  Citizens'  allowance  for losses on loans  totaled  $187,000,
which equaled the level  maintained at September 30, 1996.  Nonperforming  loans
totaled  $306,000,  or 1.0% of the total loan  portfolio  at June 30,  1997,  as
compared to nonperforming loans of $261,000,  or .9% of the total loan portfolio
at September 30, 1996. At June 30, 1997, Citizens' allowance for loan losses was
solely  general in nature  which is  includible  as a  component  of  regulatory
risk-based  capital.  Although management of LFC believes that its allowance for
losses on loans was adequate at June 30, 1997,  based on the available facts and
circumstances, there can be no assurances that the allowance will be adequate to
absorb  actual loan losses during the current  period or that  additions to such
allowance will not be necessary in future periods, which could negatively affect
LFC's results of operations.

Deposits totaled $29.6 million at June 30, 1997, an increase of $1.4 million, or
4.9%, over the $28.2 million of deposits outstanding at September 30, 1996. Such
increase  resulted  primarily  from  management's  efforts to increase  deposits
through marketing strategies.




                                        9


<PAGE>



                          London Financial Corporation


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


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

Citizens is required to maintain  minimum  levels of  regulatory  capital  under
three  separate  standards  promulgated  by the  Office of  Thrift  Supervision.
Citizens is required to maintain regulatory capital sufficient to meet tangible,
core and risk-based  capital ratios of 1.50% and 3.00% of adjusted total assets,
and 8.00% of risk-weighted assets, respectively.

As of June 30, 1997,  Citizens'  regulatory capital exceeded all minimum capital
requirements as shown in the following table:
<TABLE>
<CAPTION>

                                    Tangible                      Core                  Risk-based
                                     capital    Percent        capital    Percent          capital     Percent
<S>                                     <C>      <C>               <C>      <C>              <C>          <C>
                                                              (Dollars in thousands)
Capital under generally accepted
  accounting principles ............. $5,721                    $5,721                      $5,721
General valuation allowances ........     -                         -                          187
                                       -----                     -----                      ------
Regulatory capital computed .........  5,721     15.6            5,721     15.6              5,908      30.1
Capital requirement .................    552      1.5            1,103      3.0              1,571       8.0
                                      ------    -----            -----    -----              -----     -----

Regulatory capital - excess ......... $5,169     14.1           $4,618     12.6             $4,337      22.1
                                       =====     ====            =====     ====              =====      ====

</TABLE>

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

General

Net earnings for the nine month period ended June 30, 1997, totaled $257,000, an
increase of $23,000,  or 9.8%, over the comparable 1996 period.  The increase in
earnings  resulted  primarily from a $116,000  increase in net interest  income,
which was partially offset by a $75,000 increase in general,  administrative and
other expense and an $18,000 increase in the federal income tax provision.

Net Interest Income

Interest  income on loans for the nine months ended June 30, 1997,  decreased by
$10,000,  or .6%,  as  compared  to the nine  months  ended June 30,  1996.  The
decrease was primarily due to a decline in yield,  which was partially offset by
an increase of  approximately  $1.0  million in the weighted  average  portfolio
balance outstanding year to year. Interest income on mortgage-backed  securities
increased by $90,000, or 105.9%, due primarily to a $1.2 million increase in the
weighted average portfolio balance  outstanding year to year. Interest income on
investment securities and other interest-earning assets decreased by $30,000, or
15.4%, due primarily to a decline in the average  balance,  as these assets were
redeployed to fund growth in the loan portfolio.



                                       10



<PAGE>



                          London Financial Corporation


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


Net Interest Income (continued)

Interest  expense on deposits  decreased  by $76,000,  or 6.8%,  during the nine
months  ended June 30,  1997.  This  decrease was the result of a decline in the
cost of deposits,  coupled with a decrease in the  weighted  average  balance of
deposits outstanding.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  increased by  $116,000,  or 12.6%,  during the nine months
ended June 30, 1997, as compared to the nine months ended June 30, 1996.

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance for losses on loans to a level  considered  appropriate  by management
based on  historical  experience,  the volume and type of lending  conducted  by
Citizens,  the  status of past due  principal  and  interest  payments,  general
economic conditions,  particularly as such conditions relate to Citizens' market
area,  and  other  factors  related  to the  collectibility  of  Citizen's  loan
portfolio. As a result of such analysis, management concluded that the allowance
for losses on loans was  adequate  and, as a result,  a provision  for losses on
loans was not  necessary  during the nine month  periods ended June 30, 1997 and
1996.  There can be no assurance  that  Citizens'  allowance for losses on loans
will be adequate to cover losses on nonperforming assets in the future.

Other Income

Other income  totaled  $45,000  during each of the nine month periods ended June
30, 1997 and 1996.  Other income is comprised  primarily of service  charges and
other fees on loans and deposit accounts.

General, Administrative and Other Expense

General,  administrative and other expense increased  approximately  $75,000, or
12.1%,  during the nine  months  ended June 30,  1997,  as  compared to the same
period in 1996.  This increase was  primarily the result of a $23,000,  or 7.4%,
increase in employee compensation and benefits, a $26,000, or 76.5%, increase in
franchise taxes and a $66,000,  or 56.4%,  increase in other operating  expense,
which were partially offset by a $35,000,  or 55.6%,  decline in federal deposit
insurance premiums. The increase in compensation expense resulted primarily from
increased  costs of  employee  stock  benefit  plans  and  normal  merit  salary
increases. The increase in franchise taxes resulted primarily from the increased
shareholders'  equity following the Conversion.  The increase in other operating
expense  was due  primarily  to  increased  professional  fees and  other  costs
relating to reporting  requirements  of public stock  companies.  The decline in
federal  deposit  insurance  premiums  resulted  from a decline in premium rates
following  the  special  Savings  Association  Insurance  Fund  recapitalization
assessment levied in September 1996.

Federal Income Taxes

The provision for federal income taxes increased $18,000,  or 16.4%,  during the
nine months ended June 30, 1997, due primarily to an increase in earnings before
income taxes of $41,000 , or 11.9%.  LFC's effective tax rates amounted to 33.2%
and 32.0% during the nine months ended June 30, 1997 and 1996, respectively.

                                       11


<PAGE>



                          London Financial Corporation


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


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

General

Net earnings for the three month period ended June 30, 1997,  totaled $81,000, a
decrease of $30,000, or 27.0%, from the comparable 1996 quarter. The decrease in
net earnings  resulted  primarily from a $10,000 decrease in net interest income
and a $32,000 increase in general,  administrative  and other expense which were
partially  offset by a $7,000  increase in other income and a $5,000 decrease in
the federal income tax provision.

Net Interest Income

Interest income on loans for the three months ended June 30, 1997,  increased by
$20,000,  or 3.4%.  Interest income on mortgage-backed  securities  increased by
$28,000, or 90.3%, due to an increase in yield,  coupled with an increase in the
weighted average portfolio balance  outstanding year to year. Interest income on
investment securities and other interest-earning assets decreased by $46,000, or
46.5%.  This  decrease  was  primarily  the result of a decrease in the weighted
average portfolio balance outstanding year to year.

Interest expense on deposits increased by $5,000, or 14.2%, for the three months
ended June 30, 1997,  compared to the 1996 period.  This increase was the result
of an increase in the average balance outstanding year to year.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest  income  decreased by $10,000,  or 2.8%, for the three months ended
June 30, 1997, as compared to the three months ended June 30, 1996.

General, Administrative and Other Expense

General,  administrative and other expense increased  approximately  $32,000, or
14.9%, for the three months ended June 30, 1997,  compared to the same period in
1996. This increase was primarily the result of a $26,000, or 25.7%, increase in
employee  compensation  and  benefits  and a  $17,000,  or 154.5%,  increase  in
franchise taxes, which were partially offset by a $15,000, or 75.0%, decrease in
federal  deposit  insurance  premiums.  The  increase  in  compensation  expense
resulted primarily from increased costs related to employee stock benefit plans.
The increase in franchise  taxes reflects the increase in  shareholders'  equity
year to year, while the decline in federal deposit  insurance  premiums resulted
primarily from the decline in premium rates year to year.

Federal Income Taxes

The provision for federal income taxes  decreased by $5,000,  or 12.2%,  for the
three months ended June 30, 1997, due primarily to a decrease in earnings before
income taxes of $35,000,  or 23.0%.  LFC's effective tax rates amounted to 30.8%
and 27.0% for the three months ended June 30, 1997 and 1996, respectively.


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<PAGE>



                          London Financial Corporation


                                     PART II


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

                  None


ITEM 5.  Other Information

                  None


ITEM 6.  Exhibits and Reports on Form 8-K

                  Reports on Form 8-K:               None.

                  Exhibits:                          Financial Data Schedule.


















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<PAGE>





                                   SIGNATURES


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 J. Bodle
                                                  John J. Bodle
                                                  President



Date:    August 12, 1997                      By: /s/Joyce E. Bauerle
                                                  Joyce E. Bauerle
                                                  Treasurer
































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