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         March 31, 1999        
                               ----------------------------------------

                                       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                                                      31-1452807    
(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: (740) 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 May 14, 1999, the latest  practicable  date,  479,450 of the  registrant's
common shares, without par value, were issued and outstanding.









                               Page 1 of 16 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 Comprehensive Income               5

                Consolidated Statements of Cash Flows                         6

                Notes to Consolidated Financial Statements                    7

                Management's Discussion and Analysis of
                Financial Condition and Results of
                Operations                                                    9


PART II -  OTHER INFORMATION                                                 15

SIGNATURES                                                                   16



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

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


                                                                         March 31,       September 30,
         ASSETS                                                               1999                1998
<S>                                                                           <C>                <C>
Cash and due from banks                                                    $   715             $   507
Interest-bearing deposits in other financial institutions                    2,151               1,271
                                                                            ------              ------
         Cash and cash equivalents                                           2,866               1,778

Investment securities designated as available
  for sale - at market                                                         108                 121
Mortgage-backed securities held to maturity- at amortized
  cost, approximate market value of $2,235 and $2,733
  as of March 31, 1999 and September 30, 1998                                2,222               2,703
Loans receivable - net                                                      34,306              32,588
Office premises and equipment - at depreciated cost                            468                 374
Stock in Federal Home Loan Bank - at cost                                      253                 288
Accrued interest receivable                                                    254                 216
Prepaid expenses and other assets                                               45                  60
Prepaid federal income taxes                                                    -                   16
                                                                            ------              ------

         Total assets                                                      $40,522             $38,144
                                                                            ======              ======

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                   $34,968             $31,300
Advances from the Federal Home Loan Bank                                       300               1,800
Other liabilities                                                              152                 155
Accrued federal income taxes                                                    66                  - 
Deferred federal income taxes                                                   33                  26
                                                                            ------              ------
         Total liabilities                                                  35,519              33,281

Shareholders' equity
  Common stock - authorized 5,000,000 shares without par
    value; 529,000 shares issued                                                -                   - 
  Additional paid-in capital                                                 2,398               2,391
  Retained earnings - substantially restricted                               4,033               3,946
  Unrealized losses on securities designated as available
    for sale, net of related tax effects                                       (34)                (26)
  Shares acquired by Employee Stock Ownership Plan                            (327)               (381)
  Shares acquired by Management Recognition Plan                              (264)               (264)
  Less 49,550 treasury shares - at cost                                       (803)               (803)
                                                                            ------              ------
         Total shareholders' equity                                          5,003               4,863
                                                                            ------              ------

         Total liabilities and shareholders' equity                        $40,522             $38,144
                                                                            ======              ======
</TABLE>





                                        3



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

                        (In thousands, except share data)

                                                                       Six months ended               Three months ended
                                                                            March 31,                      March 31,
                                                                       1999         1998              1999         1998
<S>                                                                    <C>          <C>                <C>          <C>
Interest income
  Loans                                                              $1,439       $1,290              $719         $625
  Mortgage-backed securities                                             77          109                37           52
  Investment securities, interest-bearing deposits and other             64           83                31           33
                                                                      -----        -----               ---          ---
         Total interest income                                        1,580        1,482               787          710

Interest expense
  Deposits                                                              757          739               377          368
  Borrowings                                                             42           34                13            8
                                                                      -----        -----               ---          ---
         Total interest expense                                         799          773               390          376
                                                                      -----        -----               ---          ---

         Net interest income                                            781          709               397          334

Provision for losses on loans                                            18            8                 9            6
                                                                      -----        -----               ---          ---

         Net interest income after provision
           for losses on loans                                          763          701               388          328

Other income
  Gain on investment securities transactions                             -            75                -            69
  Other operating                                                        40           31                20           15
                                                                      -----        -----               ---          ---
         Total other income                                              40          106                20           84

General, administrative and other expense
  Employee compensation and benefits                                    317          222               166          110
  Occupancy and equipment                                                46           35                25           18
  Federal deposit insurance premiums                                     10           10                 5            5
  Franchise taxes                                                        38           32                16           28
  Data processing                                                        34           30                19           16
  Other operating                                                       133          121                93           61
                                                                      -----        -----               ---          ---
         Total general, administrative and other expense                578          450               324          238
                                                                      -----        -----               ---          ---

         Earnings before income taxes                                   225          357                84          174

Federal income taxes
  Current                                                                70          138                36           16
  Deferred                                                               11          (20)               (3)          40
                                                                      -----        -----               ---          ---
         Total federal income taxes                                      81          118                33           56
                                                                      -----        -----               ---          ---

         NET EARNINGS                                                $  144       $  239              $ 51         $118
                                                                      =====        =====               ===          ===

         EARNINGS PER SHARE
           Basic                                                       $.32         $.50              $.11         $.25
                                                                        ===          ===               ===          ===

           Diluted                                                     $.31         $.48              $.11         $.24
                                                                        ===          ===               ===          ===

</TABLE>

                                        4


<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                     For the three months ended December 31,
                                 (In thousands)


                                                            For the six months           For the three months
                                                               ended March 31,                ended March 31,
                                                            1999            1998           1999           1998
<S>                                                          <C>            <C>            <C>             <C>
Net earnings                                                $144            $239            $51           $118

Other comprehensive income, net of tax:
  Unrealized holding gains (losses) on securities
    during the period                                         (8)             20             (8)            50

Reclassification adjustment for realized gains
  included in earnings                                        -              (50)            -             (46)
                                                             ---             ---             --            --- 
Comprehensive income                                        $136            $209            $43           $122
                                                             ===             ===             ==            ===


</TABLE>





























                                        5



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                       For the six months ended March 31,
                                 (In thousands)

                                                                                 1999              1998
<S>                                                                               <C>                <C>
Cash flows from operating activities:
  Net earnings for the period                                                  $  144             $ 239
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Gain on investment securities transactions                                     -                (75)
    Provision for losses on loans                                                  18                 8
    Amortization of deferred loan origination fees                                (81)              (59)
    Depreciation and amortization                                                  15                10
    Federal Home Loan Bank stock dividends                                        (10)              (10)
    Amortization expense of stock benefit plans                                    61               109
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                                 (38)                3
      Prepaid expenses and other assets                                            32               (36)
      Other liabilities                                                            (3)              (78)
      Federal income taxes
        Current                                                                    66               (38)
        Deferred                                                                   11               (20)
                                                                                -----              ----
         Net cash provided by operating activities                                215                53

Cash flows provided by (used in) investing activities:
  Proceeds from maturity of investment securities                                  -                 506
  Purchase of investment securities designated as available
    for sale                                                                       -                (160)
  Proceeds from sale of investment securities designated
    as available for sale                                                          -                 177
  Principal repayments on mortgage-backed securities                              481                481
  Principal repayments on loans                                                 7,769              4,395
  Loan disbursements                                                           (9,424)            (4,104)
  Purchase of office equipment                                                   (109)                (3)
  Redemption of Federal Home Loan Bank stock                                       45                 - 
                                                                                -----              -----
         Net cash provided by (used in) investing activities                   (1,238)             1,292

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                              3,668              1,224
  Repayment of advances from Federal Home Loan Bank                            (1,500)                - 
  Distributions paid on common shares                                             (57)            (2,594)
                                                                                -----              -----
         Net cash provided by (used in) financing activities                    2,111             (1,370)
                                                                                -----              -----

Net increase (decrease) in cash and cash equivalents                            1,088                (25)

Cash and cash equivalents at beginning of period                                1,778              3,664
                                                                                -----              -----

Cash and cash equivalents at end of period                                     $2,866             $3,639
                                                                                =====              =====

Supplemental  disclosure of cash flow  information:
  Cash paid during the period for:
    Federal income taxes                                                       $   18             $  100
                                                                                =====              =====

    Interest on deposits and borrowings                                        $  806             $  774
                                                                                =====              =====


Supplemental disclosure of noncash investing activities:
  Unrealized losses on securities designated as available
    for sale, net of applicable tax effects                                    $   (8)            $  (57)
                                                                                =====              ===== 
</TABLE>

                                        6


<PAGE>


                          London Financial Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

             For the six month periods ended March 31, 1999 and 1998


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 London  Financial  Corporation  ("LFC" or the
"Corporation")  included in the Annual  Report on Form 10-KSB 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 a fair
presentation of the consolidated  financial  statements have been included.  The
results of operations  for the six and three month periods ended March 31, 1999,
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 Bank, an Ohio  commercial bank  wholly-owned by LFC,  ("Citizens").
Prior to January 4, 1998, Citizens was an Ohio savings and loan association. All
significant intercompany items have been eliminated.

3.  Earnings Per Share

Basic  earnings  per share is computed  based upon the  weighted-average  shares
outstanding  during  the  period,  less  shares in the  London  Financial  Corp.
Employee  Stock  Ownership  Plan  (the  "ESOP")  that  are  unallocated  and not
committed to be released.  Weighted-average  common  shares  outstanding,  which
gives effect to 27,918 unallocated ESOP shares,  totaled 449,102 and 451,531 for
the six and three month  periods ended March 31, 1999.  Weighted-average  common
shares deemed outstanding, which gives effect to 33,856 unallocated ESOP shares,
totaled  476,304  for each of the six and three  month  periods  ended March 31,
1998.

Diluted earnings per share is computed taking into  consideration  common shares
outstanding and dilutive  potential common shares to be issued under LFC's stock
option plan.  Weighted-average  common shares deemed outstanding for purposes of
computing diluted earnings per share totaled 465,519 and 467,948 for the six and
three month  periods  ended March 31, 1999,  and 495,350 and 495,359 for the six
and three month periods ended March 31, 1998.  Incremental shares related to the
assumed  exercise  of stock  options  included  in the  computation  of  diluted
earnings per share totaled  16,417 for each of the six and three months  periods
ended March 31, 1999,  and 19,046 and 19,055 for the six and three month periods
ended March 31, 1998, respectively.

4.  Effects of Recent Accounting Pronouncements

In June 1997,  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  (revenues,  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 that financial statement.

                                        7


<PAGE>


                          London Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

             For the six month periods ended March 31, 1999 and 1998


4.  Effects of Recent Accounting Pronouncements (continued)

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.  SFAS No. 130 is effective for fiscal
years  beginning  after  December  15,  1997.   Reclassification   of  financial
statements for earlier periods  provided for  comparative  purposes is required.
Management adopted SFAS No. 130 effective October 1, 1998, as required,  without
material impact on LFC's 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  performance.  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. Management adopted SFAS No. 131 effective October 1, 1998, as
required, without material impact on LFC's financial statements.

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging  Activities,"  which requires  entities to recognize all
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 LFC's financial position or results of
operations.



                                        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,  the  Corporation's  operations  and the  Corporation'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 the Corporation's market area generally.

Some of the  forward-looking  statements  included  herein  are  the  statements
regarding management's determination of the amount and adequacy of the allowance
for  losses on  loans,  the  effects  of the year  2000 on  certain  information
technology systems and the effect of certain recent accounting pronouncements.


Discussion of Financial Condition Changes from September 30, 1998 to March 31,
1999

At March 31, 1999,  LFC had total assets of $40.5  million,  an increase of $2.4
million,  or 6.2%,  over  September 30, 1998.  The increase in assets was funded
primarily by a $3.7 million increase in deposits,  which was partially offset by
a $1.5 million decline in borrowings.

Cash and  interest-bearing  deposits  totaled  $2.9 million at March 31, 1999, a
$1.1 million, or 61.2%, increase over the total at September 30, 1998.

Investment securities and mortgage-backed securities decreased by $494,000, to a
total  of $2.3  million  at  March  31,  1999,  primarily  reflecting  principal
repayments on mortgage-backed securities.

Loans receivable  increased by $1.7 million,  or 5.3%, as loan  disbursements of
$9.4 million exceeded principal  repayments of $7.8 million.  Loan disbursements
during  the six month  period  ended  March 31,  1999,  exceeded  the  volume of
disbursements for the same period in 1998 by $5.3 million, or 129.6%.

At March  31,  1999,  Citizens'  allowance  for loan  losses  totaled  $219,000,
compared to the $201,000 level maintained at September 30, 1998. Citizens had no
nonperforming  loans at March  31,  1999,  compared  to  nonperforming  loans of
$268,000,  or .82% of the total loan  portfolio at September  30, 1998. At March
31, 1999,  Citizens' allowance for loan losses was comprised solely of a general
loan loss allowance which is includible as a component of regulatory  risk-based
capital.  Although management of LFC believes that its allowance for loan losses
was adequate at March 31, 1999, based on the available facts and  circumstances,
there can be no assurance  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 adversely  affect LFC's results
of operations.

Deposits  totaled  $35.0 million at March 31, 1999, an increase of $3.7 million,
or 11.7%, over the $31.3 million of deposits  outstanding at September 30, 1998.
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


Discussion of Financial  Condition  Changes from September 30, 1998 to March 31,
1999 (continued)

Advances from the Federal Home Loan Bank amounted to $300,000 at March 31, 1999,
a decrease of $1.5 million,  or 83.3%,  from  September 30, 1998.  Proceeds from
deposit growth were used to repay such advances during the period.

Shareholders'  equity  totaled $5.0  million at March 31,  1999,  an increase of
$140,000,  or 2.9%,  over  September  30, 1998,  levels.  The increase  resulted
primarily  from net  earnings  of  $144,000,  coupled  with the  effects  of the
amortization  of stock benefit  plans,  which were  partially  offset by regular
dividends totaling $57,000, or $.12 per share.

At March  31,  1999,  Citizens  was  required  to  maintain  regulatory  capital
sufficient to meet certain minimum capital standards  promulgated by the Federal
Deposit  Insurance  Corporation.  As of March  31,  1999,  Citizens'  regulatory
capital was well in excess of such minimum capital requirements.


Comparison of Operating Results For the Six Month Periods Ended March 31, 1999
and 1998 

General

Net earnings for the six month period ended March 31, 1999, totaled $144,000,  a
decrease of $95,000,  or 39.7%, from the comparable 1998 period. The decrease in
earnings resulted  primarily from a $10,000 increase in the provision for losses
on loans, a $66,000 decrease in other income and a $128,000 increase in general,
administrative  and other  expense,  which  were  partially  offset by a $72,000
increase in net  interest  income and a $37,000  decrease in the  provision  for
federal income taxes.

Net Interest Income

Interest  income on loans for the six months ended March 31, 1999,  increased by
$149,000,  or 11.6%,  compared  to the six  months  ended  March 31,  1998.  The
increase  was  primarily  due to an  approximate  $4.1  million  increase in the
weighted-average   balance  outstanding.   Interest  income  on  mortgage-backed
securities  decreased by $32,000,  or 29.4%,  due primarily to a decrease in the
weighted-average  portfolio balance outstanding year to year. Interest income on
investment securities and other interest-earning assets decreased by $19,000, or
22.9%.

Interest  expense on  deposits  increased  by $18,000,  or 2.4%,  during the six
months ended March 31, 1999. This increase  resulted  primarily from an increase
in the weighted average balance of deposits  outstanding,  which was offset by a
decrease in the cost of deposits.

Interest  expense on borrowings  increased by $8,000,  or 23.5%,  during the six
months ended March 31, 1999.  The increase was  primarily  due to an increase in
the weighted-average balance of advances outstanding.

As a result of the foregoing  changes in interest  income and interest  expense,
net interest income increased by $72,000,  or 10.2%, during the six months ended
March 31, 1999, compared to the six months ended March 31, 1998.

                                       10


<PAGE>


                          London Financial Corporation

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


Comparison of Operating Results For the Six Month Periods Ended March 31, 1999
and 1998 (continued)

Provision for Losses on Loans

A  provision  for  losses on loans is  charged  to  earnings  to bring the total
allowance for loan losses to a level considered  appropriate by management based
on historical experience,  the volume and type of lending conducted by the Bank,
the status of past due principal  and interest  payments,  and general  economic
conditions, particularly as such conditions relate to the Bank's loan portfolio.
As a result of such analysis,  management elected to record an $18,000 provision
for loan losses  during the six-month  period ended March 31, 1999.  The current
period  provision was  attributable  to growth in the commercial loan portfolio.
There can be no assurance that the allowance for loan losses of the Bank will be
adequate to cover losses on nonperforming assets in the future.

Other Income

Other  income  totaled  $40,000  during the six months  ended March 31,  1999, a
decrease of $66,000,  or 62.3%,  from the six month period ended March 31, 1998.
The decrease  resulted  primarily  from a $75,000 gain on investment  securities
transactions  in the 1998 period,  which was  partially  offset by a $9,000,  or
29.0%,  increase in other operating income.  Other operating income is comprised
primarily of service fees on deposit accounts, late charges on loan accounts and
rental income on leased office space and safety deposit boxes.

General, Administrative and Other Expense

General,  administrative  and other  expense  increased by  $128,000,  or 28.4%,
during the six months ended March 31, 1999,  compared to 1998.  The increase was
primarily  comprised of a $95,000, or 42.8%,  increase in employee  compensation
and benefits,  due primarily to an increase in staffing  levels year to year and
normal  merit  increases,  coupled  with a $12,000,  or 9.9%,  increase in other
operating expense year to year.

Federal Income Taxes

The provision for federal income taxes decreased by $37,000,  or 31.4%,  for the
six month  period  ended  March 31,  1999,  compared to the same period in 1998.
LFC's  effective  tax rates  amounted  to 36.0% and 33.1%  during the six months
ended March 31, 1999 and 1998, respectively.


Comparison of Operating Results For the Three Month Periods Ended March 31, 1999
and 1998 

General

Net earnings for the three month period ended March 31, 1999, totaled $51,000, a
decrease of $67,000,  or 56.8%, from the comparable 1998 period. The decrease in
earnings  resulted  primarily from a $3,000 increase in the provision for losses
on loans, a $64,000 decrease in other income and an $86,000 increase in general,
administrative  and other  expense,  which  were  partially  offset by a $63,000
increase in net interest income.

                                       11



<PAGE>


                          London Financial Corporation

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


Comparison of Operating Results For the Three Month Periods Ended March 31, 1999
and 1998 (continued)

Net Interest Income

Interest income on loans for the three months ended March 31, 1999, increased by
$94,000,  or 15.0%,  compared  to the three  months  ended March 31,  1998.  The
increase  was  primarily  due to an  approximate  $4.6  million  increase in the
weighted-average   balance  outstanding.   Interest  income  on  mortgage-backed
securities  decreased by $15,000,  or 28.8%,  due primarily to a decrease in the
weighted-average  portfolio balance outstanding year to year. Interest income on
investment securities and other interest-earning  assets decreased by $2,000, or
6.1%.

Interest  expense on deposits  increased  by $9,000,  or 2.4%,  during the three
months ended March 31, 1999. This increase  resulted  primarily from an increase
in the weighted average balance of deposits  outstanding,  which was offset by a
decrease in the cost of deposits.

Interest expense on borrowings  increased by $5,000, or 62.5%,  during the three
months ended March 31, 1999.  The increase was  primarily  due to an increase in
the weighted-average balance of advances outstanding.

As a result of the foregoing  changes in interest  income and interest  expense,
net  interest  income  increased by $63,000,  or 18.9%,  during the three months
ended March 31, 1999, compared to the three months ended March 31, 1998.

Provision for Losses on Loans

Management  elected  to record a $9,000  provision  for loan  losses  during the
three-month period ended March 31, 1999,  compared to the $6,000 recorded in the
1998 quarter.  The current period  provision was  attributable  to growth in the
commercial loan portfolio. There can be no assurance that the allowance for loan
losses of the Bank will be adequate to cover losses on  nonperforming  assets in
the future.

Other Income

Other  income  totaled  $20,000  during the three months ended March 31, 1999, a
decrease of $64,000, or 76.2%, from the three month period ended March 31, 1998.
The decrease  resulted  primarily  from a $69,000 gain on investment  securities
transactions  in the 1998 period,  which was  partially  offset by a $5,000,  or
33.3%,  increase in other operating income.  Other operating income is comprised
primarily of service fees on deposit accounts, late charges on loan accounts and
rental income on leased office space and safety deposit boxes.

General, Administrative and Other Expense

General, administrative and other expense increased by $86,000, or 36.1%, during
the three months ended March 31, 1999,  compared to the same period in 1998. The
increase was primarily  comprised of a $56,000,  or 50.9%,  increase in employee
compensation and benefits,  due primarily to an increase in staffing levels year
to year, coupled with normal merit increases, coupled with a $32,000 increase in
other operating expense year to year.


                                       12


<PAGE>


                          London Financial Corporation

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


Comparison of Operating Results For the Three Month Periods Ended March 31, 1999
and 1998 (continued)

Federal Income Taxes

The provision for federal income taxes decreased by $23,000,  or 41.1%,  for the
three month period  ended March 31,  1999,  compared to the same period in 1998.
LFC's  effective  tax rates  amounted to 39.3% and 32.2% during the three months
ended March 31, 1999 and 1998, respectively.


Year 2000 Compliance Matters

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

Citizens'  primary data  processing  applications  are handled by a  third-party
service bureau,  Fiserv.  Fiserv has advised  Citizens that it has migrated to a
fully Year 2000 compliant processing system that will be fully tested by July 1,
1999.  Management has also reviewed Citizens'  ancillary equipment and is in the
process of providing the appropriate  remedial  measures,  including  requesting
service  providers to assure  Citizens that their systems and products are fully
year 2000 compliant.  Citizens has upgraded its existing teller operating system
with a capital expenditure of approximately  $65,000. No assurance can be given,
however, that significant expense will not be incurred in future periods. In the
unlikely  event that  Citizens is  ultimately  required to purchase  replacement
computer systems,  programs and equipment,  or incur substantial expense to make
Citizens' current systems, programs and equipment year 2000 compliant, LFC's net
earnings and financial condition could be adversely affected.

Citizens has developed a contingency plan in case  mission-critical  systems are
not  successfully  renovated in a timely manner or if they actually fail at Year
2000  critical  dates.  The  contingency  plan  states that  Citizens  deems the
likelihood of failure of the service  provider's  efforts to implement Year 2000
changes to the on-line core account  processing system to be remote;  however, a
more  likely  scenario is that the  service  provider's  system will be down for
several days or weeks upon arrival of Year 2000. The plan, therefore,  primarily
addresses  action  to deal  with  the  latter  possibility  rather  than  with a
catastrophic event, including Citizens' ability to process transactions manually
over a short-term period, if necessary,  upon arrival of the year 2000. Citizens
does not consider  contingency planning to be a static process;  therefore,  the
plan will be amended to address a catastrophic event if testing results indicate
greater concern.



                                       13



<PAGE>


                          London Financial Corporation

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


Year 2000 Compliance Matters (continued)

In addition to possible expense related to its own systems, Citizens could incur
losses if loan  payments  are delayed due to year 2000  problems  affecting  any
major  borrowers  in  Citizens'  primary  market area.  Because  Citizens'  loan
portfolio is highly diversified with regard to individual borrowers and types of
businesses and Citizens' primary market area is not significantly dependent upon
one employer or industry,  Citizens 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.  Citizens is assessing such risks among
its customers.  LFC 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.  Citizens is
therefore  attempting  to assess  these risks and take action to minimize  their
effect.































                                       14



<PAGE>


                          London Financial Corporation

                                     PART II


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

         None

ITEM 5.  Other Information

         None


ITEM 6.  Exhibits and Reports on Form 8-K

         Reports on Form 8-K:               None.

         Exhibit 27:                        Financial Data Schedule for the six
                                            months ended March 31, 1999.


















                                       15



<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:      May 14, 1999                         By: /s/John J. Bodle 
      ------------------------------                --------------------------
                                                    John J. Bodle
                                                    President and
                                                    Chief Executive Officer



Date:      May 14, 1999                         By: /s/Joyce E. Bauerle 
      ------------------------------                --------------------------
                                                    Joyce E. Bauerle
                                                    Treasurer and
                                                    Principal Accounting Officer

































                                       16