FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20552



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

For the quarterly period ended March 31, 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 executive office)                        (Zip Code)

       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 May 9, 1997,  the latest  practicable  date,  515,160 of the  registrant's
common shares, without par value, were issued and outstanding.



                                      -1-
<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                                                  9


PART II -    OTHER INFORMATION                                          15

SIGNATURES                                                              16


                                      -2-
<PAGE>
<TABLE>

                          London Financial Corporation

                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                        (In thousands, except share data)

                                                                      March 31,     September 30
ASSETS                                                                   1997           1996
                                                                        ------         ------
<S>                                                                   <C>            <C>     
Cash and due from banks                                               $  1,106       $    319
Interest-bearing deposits in other financial institutions                2,509          2,324
                                                                      --------       --------
Cash and cash equivalents                                                3,615          2,643

Investment securities designated as available for sale - at                270            220
   market
Investment securities - at amortized cost, approximate market
   value of $500 and $1,991 at March 31, 1997 and September 30,            500          2,000
   1996, respectively
Mortgage-backed securities - at cost, approximate market value
   of $3,742 and $3,944 at March 31, 1997 and September 30,              3,761          4,032
   1996, respectively
Loans receivable - net                                                  28,958         27,031
Office premises and equipment - at depreciated cost                        349            354
Stock in Federal Home Loan Bank - at cost                                  270            261
Accrued interest receivable                                                154            178
Prepaid expenses and other assets                                           60             21
Deferred federal income taxes                                             --               77
                                                                      --------       --------

    Total assets                                                      $ 37,937       $ 36,817
                                                                      ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                              $ 29,309       $ 28,195
Advances from the Federal Home Loan Bank                                   800            300
Other liabilities                                                          147            279
Accrued federal income taxes                                               136            136
Deferred federal income taxes                                                8           --
                                                                      --------       --------
    Total liabilities                                                   30,400         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                             3,534          3,416
Unrealized gains on securities designated as available for sale,
   net of related tax effects                                               37              4
Less 13,840 treasury shares - at cost                                     (206)          --
                                                                      --------       --------
   Total shareholders' equity                                            7,537          7,907
                                                                      --------       --------

   Total liabilities and shareholders' equity                         $ 37,937       $ 36,817
                                                                      ========       ========

</TABLE>

                                      -3-
<PAGE>
<TABLE>

                          London Financial Corporation

                       CONSOLIDATED STATEMENTS OF EARNINGS

                        (In thousands, except share data)

                                                            Six months ended      Three months ended
                                                                March 31,              March 31,
                                                            1997        1996        1997      1996
                                                          --------    --------    --------  --------
<S>                                                        <C>         <C>           <C>       <C> 
Interest income                                                                 
  Loans                                                    $1,165      $1,195        $589      $604
  Mortgage-backed securities                                  116          54          60        27
  Investments securities                                       43          13          14         7
  Interest-bearing deposits and other                          69          83          37        46
                                                           ------      ------        ----      ----
      Total interest income                                 1,393       1,345         700       684
Interest expense                                                                
  Deposits                                                    691         772         342       385
  Borrowings                                                   17          14          10         7
                                                           ------      ------        ----      ----
      Total interest expense                                  708         786         352       392
                                                           ------      ------        ----      ----
                                                                                
      Net interest income                                     685         559         348       292
                                                                                
Other operating  income                                        31          38          16        23
                                                                                
General, administrative and other expense                                       
  Employee compensation and benefits                          205         208          98       106
  Occupancy and equipment                                      33          35          16        18
  Federal deposit insurance premiums                           23          43           5        18
  Franchise taxes                                              32          23          27        12
  Data processing                                              28          29          14        15
  Other                                                       127          67          80        23
                                                           ------      ------        ----      ----
      Total general, administrative and other expense         448         405         240       192
                                                           ------      ------        ----      ----
                                                                                
      Earnings before income taxes                            268         192         124       123
                                                                                
Federal income taxes                                                            
  Current                                                      24          69          35        43
  Deferred                                                     68        --             8       --
                                                           ------      ------        ----      ----
      Total federal income taxes                               92          69          43        43
                                                           ------      ------        ----      ----
                                                                                
      NET EARNINGS                                         $  176      $  123        $ 81      $ 80
                                                           ======      ======        ====      ====
                                                                                
      EARNINGS PER SHARE                                   $  .37         N/A        $.17       N/A
                                                           ======      ======        ====      ====
                                                                              
</TABLE>
                                      -4-
<PAGE>
<TABLE>

                          London Financial Corporation
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       For the six months ended March 31,
                                 (In thousands)

                                                                       1997          1996
                                                                     --------      --------
<S>                                                                  <C>           <C>    
Cash flows provided by (used in) operating activities:
  Net earnings for the period                                        $   176       $   123
  Adjustments to reconcile net earnings to net cash provided by
    (used in) operating activities:
    Amortization of deferred loan origination fees                       (40)          (49)
    Depreciation and amortization                                         14            15
    Federal Home Loan Bank stock dividends                                (9)           (9)
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                         24           (12)
      Prepaid expenses and other assets                                  (39)           20
      Other liabilities                                                 (132)          158
      Federal income taxes
        Prepaid                                                         --               5
        Deferred                                                          68          --
                                                                     -------       -------
         Net cash used in operating activities                            62           251

Cash flows provided by (used in) investing activities:
  Proceeds from maturity of investment securities                      1,500          --
  Principal repayments on mortgage-backed securities                     268            89
  Principal repayments on loans                                        2,582         3,181
  Loan disbursements                                                  (4,469)       (2,155)
  Purchase of office equipment                                            (6)           (7)
                                                                     -------       -------
         Net cash provided by (used in) investing activities            (125)        1,108

Cash flows provided by (used in) financing activities:
  Net increase (decrease) in deposit accounts                          1,114        (1,367)
  Proceeds from Federal Home Loan Bank advances                          500          --
  Net proceeds from issuance of common shares                           --           4,910
  Loan to Employee Stock Ownership Plan                                 --            (423)
  Purchase of common shares for Management Recognition Plan             (315)         --
  Purchase of treasury shares                                           (206)         --
  Dividends on common shares                                             (58)         --
                                                                     -------       -------
         Net cash provided by financing activities                     1,035         3,120
                                                                     -------       -------

Net increase in cash and cash equivalents                                972         4,479

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

Cash and cash equivalents at end of period                           $ 3,615       $ 7,323
                                                                     =======       =======

Supplemental disclosure of cash flow information:
   Cash paid during the period for:
    Federal income taxes                                             $    23       $    20
                                                                     =======       =======
    Interest on deposits and borrowings                              $   705       $   786
                                                                     =======       =======


</TABLE>
                                      -5-

<PAGE>


                          London Financial Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        For the three and six month periods ended March 31, 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 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 six and three month periods
ended March 31, 1997, 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 six and three month  periods ended March 31, 1997, is
computed  based upon 482,573 and 478,376  weighted-average  shares  outstanding,
respectively,  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. 25,  "Earnings Per
Share," are not  applicable  to the six and three month  periods ended March 31,
1996, as LFC  completed  its  conversion to the stock form of ownership in March
1996.

                                      -6-
<PAGE>


                          London Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

        For the three and six month periods ended March 31, 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


                                      -7-
<PAGE>


                          London Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

        For the three and six month periods ended March 31, 1997 and 1996

4.  Effects of Recent Accounting Pronouncements (continued)


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  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 six months
ended March 31, 1997,  would have each been $.37. Basic and diluted earnings per
share for the three months ended March 31, 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 March 31,
1997

At March 31, 1997,  LFC had total assets of $37.9  million,  an increase of $1.1
million, or 3.0%, over the September 30, 1996, total. The increase in assets was
funded primarily from an increase in deposits of approximately $1.1 million.

Investment securities and mortgage-backed  securities decreased by $1.7 million,
to a total of $4.5  million  at March  31,  1997,  reflecting  the  maturity  of
investment   securities  totaling   approximately  $1.5  million  and  principal
repayments on mortgage-backed securities of $268,000.

Loans receivable  increased $1.9 million, or 7.1%, as loan disbursements of $4.5
million exceeded  principal  repayments of $2.6 million.  Loans disbursed during
the 1997 period exceeded those of the comparable 1996 period by $2.3 million, or
107.4%.

At March 31, 1997,  Citizens' allowance for loan losses totaled $187,000,  which
equaled the level maintained at September 30, 1996.  Nonperforming loans totaled
$299,000,  or 1.0% of the total loan portfolio at March 31, 1997, as compared to
nonperforming loans of $261,000, or .9% of the total loan portfolio at September
30, 1996. At March 31, 1997,  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, 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.


                                      -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 March 31,
1997 (continued)

Deposits  totaled  $29.3 million at March 31, 1997, an increase of $1.1 million,
or 4.0%,  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.

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 March 31, 1997,  Citizens' regulatory capital exceeded all minimum capital
requirements as shown in the following table:

<TABLE>
                                Tangible               Core               Risk-based
                                 capital   Percent    capital    Percent    capital    Percent
                                --------   -------    -------    -------  ----------   -------
                                               (Dollars in thousands)
<S>                               <C>        <C>        <C>        <C>       <C>        <C> 
Capital under generally          $5,633                $5,633               $5,633
  accepted accounting
  principles
Additional capital items
  General valuation allowances        -                     -                  187
                                -------               -------               ------
Regulatory capital computed       5,633      15.5       5,633      15.5      5,820      29.7
Capital requirement                 546       1.5       1,092       3.0      1,568        8.0
                                 ------     -----       -----     -----      -----      -----

Regulatory capital - excess      $5,087      14.0      $4,541      12.5     $4,252      21.7

</TABLE>

Comparison of Operating Results For the Six Month Periods Ended March 31, 1997
and 1996

General

Net earnings for the six month period ended March 31, 1997, totaled $176,000, an
increase of $53,000,  or 43.1%, over the comparable 1996 period. The increase in
net earnings resulted primarily from a $126,000 increase in net interest income,
which was partially offset by a $43,000 increase in general,  administrative and
other  expense,  a $7,000  decrease  in other  operating  income  and a  $23,000
increase in the federal income tax provision.


                                      -10-
<PAGE>


                          London Financial Corporation

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

Comparison of Operating Results For the Six Month Periods Ended March 31, 1997
and 1996 (continued)

Net Interest Income

Interest  income on loans for the six months ended March 31, 1997,  decreased by
$30,000,  or 2.5%,  as compared  to the six months  ended  March 31,  1996.  The
decrease  was  primarily  due to a decline  in yield of  approximately  33 basis
points to 8.34% in the 1997 period, which was partially offset by an increase in
the  weighted-average  balance  outstanding  of  $378,000.  Interest  income  on
mortgage-backed  securities  increased by $62,000, or 114.8%, due primarily to a
$1.9 million increase in the weighted-average portfolio balance outstanding year
to year.  Interest  income on investment  securities and other  interest-earning
assets  increased by $16,000,  or 16.7%,  due primarily to an increase in yield.
The increases in interest  income on investment and  mortgage-backed  securities
primarily reflect the earnings on securities purchased utilizing net proceeds of
LFC's offering of common shares in connection with the Conversion.

Interest  expense on deposits  decreased  by $81,000,  or 10.5%,  during the six
months ended March 31, 1997, as compared to the comparable  period in 1996. This
decrease resulted  primarily from a $1.3 million decline in the weighted average
balance of deposits outstanding, coupled with a decrease in the cost of deposits
year to year.

Interest  expense on borrowings  increased by $3,000,  or 21.4%,  during the six
months ended March 31, 1997, as compared to the  comparable  period in 1996. The
increase is  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 $126,000, or 22.5%, during the six months ended
March 31, 1997, as compared to the six months ended March 31, 1996. The interest
rate spread totaled approximately 2.96% for the six months ended March 31, 1997,
compared to 2.74% for the same  period in 1996,  while the net  interest  margin
increased  to  approximately  3.84% in the 1997  period  from  3.28% in the 1996
period.

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 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 Citizens' loan portfolio.  As a


                                      -11-
<PAGE>

                          London Financial Corporation

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

Provision for Losses on Loans (continued)

result of such analysis, management concluded that the allowance for loan losses
was adequate and, as a result, a provision for losses on loans was not necessary
during the six month period ended March 31, 1997. There can be no assurance that
the loan  loss  allowance  of  Citizens  will be  adequate  to cover  losses  on
nonperforming assets in the future.

Other Income

Other income totaled $31,000 for the six months ended March 31, 1997, a decrease
of $7,000, or 18.4%, from the comparable 1996 period.  Other 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 approximately $43,000, or
10.6%,  during the six months  ended March 31,  1997,  as compared to 1996.  The
increase  was  primarily  comprised  of a $60,000,  or 89.6%,  increase in other
operating expenses, mainly professional fees and other costs associated with the
reporting  requirements of a public stock company, which was partially offset by
a $20,000,  or 46.5%,  decrease in federal deposit  insurance  premiums,  due to
lower assessment rates during 1997 compared to 1996.

Federal Income Taxes

The provision for federal income taxes increased $23,000,  or 33.3%,  during the
six months ended March 31, 1997, due primarily to an increase in earnings before
income taxes of $76,000,  or 39.6%.  LFC's effective tax rates amounted to 34.3%
and 35.9% during the six months ended March 31, 1997 and 1996, respectively.


Comparison of Operating Results For the Three Month Periods Ended March 31, 1997
and 1996

General

Net earnings for the three month period ended March 31, 1997,  totaled  $81,000,
an increase of $1,000, or 1.3%, over the comparable 1996 period. The increase in
earnings  resulted  primarily  from a $56,000  increase in net interest  income,
which was partially offset by a $48,000 increase in general,  administrative and
other expense and a $7,000 decrease in other operating income.


                                      -12-
<PAGE>


                          London Financial Corporation

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

Net Interest Income

Interest income on loans for the three months ended March 31, 1997, decreased by
$15,000,  2.5%,  as  compared to the three  months  ended  March 31,  1996.  The
decrease was primarily due to a decline in yield,  which was partially offset by
a $1.0 million increase in the weighted-average  balance  outstanding.  Interest
income on  mortgage-backed  securities  increased  by  $33,000,  or 122.2%,  due
primarily to a $1.9 million increase in the  weighted-average  portfolio balance
year to year as a portion of the  proceeds  of the  Conversion  was  invested in
mortgage-backed  securities.  Interest income on investment securities and other
interest-earning  assets  decreased  by  $2,000,  or 3.8%,  due  primarily  to a
decrease  of  approximately  $2.2  million  in  the   weighted-average   balance
outstanding year to year.

Interest expense on deposits  decreased by $43,000,  or 11.2%,  during the three
months  ended March 31,  1997.  This  decrease  resulted  primarily  from a $1.1
million decline in the weighted average balance of deposits outstanding, coupled
with a decrease in the cost of deposits.

Interest expense on borrowings  increased by $3,000, or 42.9%,  during the three
months ended March 31, 1997. The increase is 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 $56,000,  or 19.2%,  during the three months
ended March 31, 1997, as compared to the three months ended March 31, 1996.  The
interest  rate spread  totaled  approximately  3.15% for the three  months ended
March 31,  1997,  compared to 2.73% for the same  period in 1996,  while the net
interest margin increased to  approximately  3.93% in the 1997 period from 3.37%
in the 1996 period.

Other Income

Other  income  totaled  $16,000  during the three months ended March 31, 1997, a
decrease of $7,000,  or 30.4%, as compared to the three month period ended March
31,  1996.  Other  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.

                                      -13-
<PAGE>

                          London Financial Corporation

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

General, Administrative and Other Expense

General, administrative and other expense increased by approximately $48,000, or
25.0%,  during the three months ended March 31, 1997,  as compared to 1996.  The
increase  was  primarily  comprised of a $57,000,  or 247.8%,  increase in other
operating expenses, mainly professional fees and other costs associated with the
reporting  requirements of a public stock company, which was partially offset by
a $13,000, or 72.2%, decrease in federal deposit insurance premiums due to lower
assessment rates during 1997 compared to 1996.

Federal Income Taxes

The  provision for federal  income taxes  totaled  $43,000 for each of the three
month periods ended March 31, 1997 and 1996.  LFC's effective tax rates amounted
to 34.7% and  35.0%  during  the three  months  ended  March 31,  1997 and 1996,
respectively.


                                      -14-
<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 for the six
                                        months ended March 31, 1997.



                                      -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 13, 1997                      By: /s/ John J. Bodle
                                                ________________________________
                                                John J. Bodle
                                                President and
                                                Chief Executive Officer



Date: May 13, 1997                      By: /s/ Joyce E. Bauerle
                                                ________________________________
                                                Joyce E. Bauerle
                                                Treasurer and
                                                Principal Accounting Officer