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       December 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                                        (Zip Code)
executive office)

Issuer'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 February 6, 1998, the latest practicable date, 510,160 of the registrant's
common shares, without par value, were issued and outstanding.









                               Page 1 of 13 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                                             12

SIGNATURES                                                                13









                                       2

<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

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


                                                                                     December 31,         September 30,
         ASSETS                                                                              1997                  1997
<S>                                                                                         <C>                  <C>
Cash and due from banks                                                                 $     431             $     322
Interest-bearing deposits in other financial institutions                                   4,049                 3,342
                                                                                          -------               -------
         Cash and cash equivalents                                                          4,480                 3,664

Investment securities designated as available for sale - at market                            161                   155
Investment securities - at amortized cost, approximate market
  value of $502 at September 30, 1997                                                          -                    500
Mortgage-backed securities - at cost, approximate market
  value of $3,518 and $3,613 at December 31, 1997 and
  September 30, 1997, respectively                                                          3,492                 3,586
Loans receivable - net                                                                     28,931                29,465
Office premises and equipment - at depreciated cost                                           358                   360
Stock in Federal Home Loan Bank - at cost                                                     285                   280
Accrued interest receivable                                                                   158                   169
Prepaid expenses and other assets                                                              15                    31
Deferred federal income taxes                                                                  36                    -
                                                                                        ---------               ------

         Total assets                                                                     $37,916               $38,210
                                                                                           ======                ======

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                                  $30,673               $29,951
Advances from the Federal Home Loan Bank                                                      300                   300
Other borrowed money                                                                        1,400                    -
Other liabilities                                                                             138                   162
Accrued federal income taxes                                                                  187                   141
Deferred federal income taxes                                                                  -                     52
                                                                                          -------             ---------
         Total liabilities                                                                 32,698                30,606

Shareholders' equity
  Common shares - authorized 5,000,000 shares, without par value;
    529,000 shares issued                                                                      -                     -
  Additional paid-in capital                                                                2,388                 4,910
  Shares acquired by Employee Stock Ownership Plan                                           (381)                 (423)
  Shares acquired by Management Recognition Plan                                             (315)                 (315)
  Retained earnings - substantially restricted                                              3,773                 3,683
  Unrealized gains on securities designated as available for
    sale, net of related tax effects                                                           35                    31
  Less 18,840 treasury shares - at cost                                                      (282)                 (282)
                                                                                         --------              --------
         Total shareholders' equity                                                         5,218                 7,604
                                                                                          -------               -------

         Total liabilities and shareholders' equity                                       $37,916               $38,210
                                                                                           ======                ======
</TABLE>




                                        3



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

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


                                                                             1997                1996
<S>                                                                          <C>                  <C>
Interest income
  Loans                                                                      $665                $576
  Mortgage-backed securities                                                   57                  56
  Investment securities                                                         3                  29
  Interest-bearing deposits and other                                          47                  32
                                                                             ----                ----
         Total interest income                                                772                 693

Interest expense
  Deposits                                                                    371                 349
  Borrowings                                                                   26                   7
                                                                             ----               -----
         Total interest expense                                               397                 356
                                                                              ---                 ---

         Net interest income                                                  375                 337

Provision for losses on loans                                                   2                  -
                                                                            -----               -----

         Net interest income after provision for
           losses on loans                                                    373                 337

Other income
  Gain on investment securities transactions                                    6                  -
  Other operating                                                              16                  15
                                                                             ----                ----
         Total other income                                                    22                  15

General, administrative and other expense
  Employee compensation and benefits                                          112                 107
  Occupancy and equipment                                                      17                  17
  Federal deposit insurance premiums                                            5                  18
  Franchise taxes                                                               4                   5
  Data processing                                                              14                  14
  Other                                                                        60                  47
                                                                             ----                ----
         Total general, administrative and other expense                      212                 208
                                                                              ---                 ---

         Earnings before income taxes                                         183                 144

Federal income taxes
  Current                                                                     152                 (11)
  Deferred                                                                    (90)                 60
                                                                             ----                ----
         Total federal income taxes                                            62                  49
                                                                             ----                ----

         NET EARNINGS                                                        $121               $  95
                                                                              ===                ====

         EARNINGS PER SHARE
           Basic                                                             $.26                $.20
                                                                              ===                 ===

           Diluted                                                           $.25                $.20
                                                                              ===                 ===
</TABLE>


                                        4


<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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


                                                                                                 1997              1996
<S>                                                                                               <C>              <C>
Cash flows provided by (used in) operating activities:
  Net earnings for the period                                                                 $   121          $     95
  Adjustments to reconcile net earnings to net cash
  provided by (used in) operating activities:
    Gain on investment securities transactions                                                     (6)               -
    Provision for losses on loans                                                                   2                -
    Amortization of deferred loan origination fees                                                (35)              (18)
    Depreciation and amortization                                                                   5                 6
    Federal Home Loan Bank stock dividends                                                         (5)               (5)
    Amortization expense of stock benefit plans                                                    53                -
    Increase (decrease) in cash due to changes in:
      Accrued interest receivable                                                                  11                12
      Prepaid expenses and other assets                                                            16                 8
      Other liabilities                                                                           (24)             (154)
      Federal income taxes
        Current                                                                                    46               (35)
        Deferred                                                                                  (90)               60
                                                                                              -------           -------
         Net cash provided by (used in) operating activities                                       94               (31)

Cash flows provided by (used in) investing activities:
  Proceeds from maturity of investment securities                                                 506              1,000
  Principal repayments on mortgage-backed securities                                               94                 80
  Principal repayments on loans                                                                 2,843              1,368
  Loan disbursements                                                                           (2,276)            (2,178)
  Purchase of office equipment                                                                     (3)                -
                                                                                             --------              ----
         Net cash provided by investing activities                                              1,164                270

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                                                722                600
  Proceeds from other borrowed money                                                            1,400                 -
  Distributions paid on common shares                                                          (2,564)               (32)
                                                                                                -----            -------
         Net cash provided by (used in) financing activities                                     (442)               568
                                                                                               ------             ------

Net increase in cash and cash equivalents                                                         816                807

Cash and cash equivalents at beginning of period                                                3,664              2,643
                                                                                                -----              -----

Cash and cash equivalents at end of period                                                     $4,480             $3,450
                                                                                                =====              =====

Supplemental  disclosure of cash flow  information:  Cash paid during the period
  for:
    Federal income taxes                                                                      $   100          $     23
                                                                                               ======           =======

    Interest on deposits and borrowings                                                       $   378           $   356
                                                                                               ======            ======


Supplemental disclosure of noncash investing activities:
  Unrealized gains on investment securities designated
    as available for sale, net of related tax effects                                       $       4            $   -
                                                                                             ========             ====
</TABLE>


                                        5


<PAGE>


                          London Financial Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


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") included in
the Annual Report on Form 10-KSB for the year ended September 30, 1997. However,
in the  opinion  of  management,  all  adjustments  (consisting  of only  normal
recurring  accruals)  which  are  necessary  for  a  fair  presentation  of  the
consolidated  financial statements have been included. The results of operations
for  the  three  month  periods  ended  December  31,  1997  and  1996,  are not
necessarily indicative of the results which may be expected for an entire fiscal
year.

2.  Principles of Consolidation

The accompanying  consolidated  financial statements include the accounts of LFC
and  The  Citizens  Loan  &  Savings  Company   ("Citizens").   All  significant
intercompany items have been eliminated.

3.  Earnings Per Share

Basic earnings per share for the three month periods ended December 31, 1997 and
1996,  is  computed  based upon  467,840  and  486,680  weighted-average  shares
outstanding,  respectively,  which  gives  effect  to  a  reduction  for  42,320
unallocated  shares  held by the London  Financial  Corporation  Employee  Stock
Ownership Plan (the "ESOP") in accordance with Statement of Position 93-6.

Diluted earnings per share is computed taking into  consideration  common shares
outstanding and dilutive potential common shares,  i.e. the Corporation's  stock
option plan.  Weighted-average  common shares deemed outstanding for purposes of
computing diluted earnings per share totaled 486,808 for the three month periods
ended  December  31, 1997,  and 486,680 for the three months ended  December 31,
1996.

4.  Effects of Recent Accounting Pronouncements

In June 1996,  the FASB issued  SFAS No.  125,  "Accounting  for  Transfers  and
Servicing of Financial Assets and Extinguishments of Liabilities", that provides
accounting  guidance on transfers of  financial  assets,  servicing of financial
assets, and  extinguishment of liabilities.  SFAS No. 125 introduces an approach
to accounting for transfers of financial assets that provides a means of dealing
with more complex  transactions  in which the seller  disposes of only a partial
interest  in the assets,  retains  rights or  obligations,  makes use of special
purpose  entities in the  transaction,  or otherwise has continuing  involvement
with the transferred assets. The new accounting method, the financial components
approach,  provides that the carrying amount of the financial assets transferred
be allocated to  components  of the  transaction  based on their  relative  fair
values. SFAS No. 125 provides criteria for determining whether control of assets
has been relinquished and whether a sale has occurred.  If the transfer does not
qualify as a sale,  it is  accounted  for as a secured  borrowing.  Transactions
subject to the  provisions  of SFAS No. 125  include,  among  others,  transfers
involving  repurchase  agreements,  securitizations  of financial  assets,  loan
participations,  factoring  arrangements,  and  transfers  of  receivables  with
recourse.

                                        6


<PAGE>


                          London Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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


4.  Effects of Recent Accounting Pronouncements (continued)

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.

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 June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income."
SFAS No. 130  establishes  standards for reporting and display of  comprehensive
income and its components (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.

SFAS  No.  130  requires  that  an  enterprise   (a)  classify  items  of  other
comprehensive  income by their nature in a financial  statement  and (b) display
the accumulated balance of other  comprehensive  income separately from retained
earnings and additional  paid-in capital in the equity section of a statement of
financial  position.  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.  SFAS No. 130 is not expected to
have a 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. SFAS No.
131 is not expected to have a material impact on LFC's financial statements.

                                        7


<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, 1997 to
  December 31, 1997

At December  31,  1997,  LFC had total  assets of $37.9  million,  a decrease of
$294,000,  or .8%,  from  September  30, 1997.  The decrease in assets  resulted
primarily from the $5.00 per share return of capital distribution, totaling $2.5
million, which was paid to LFC's shareholders in November, 1997.

Investment securities and mortgage-backed securities decreased by $588,000, to a
total  of $3.7  million  at  December  31,  1997,  reflecting  the  maturity  of
investment securities totaling  approximately  $500,000 and principal repayments
on mortgage-backed securities of $94,000.

Loans receivable  decreased by $534,000,  or 1.8%, as loan disbursements of $2.3
million were exceeded by principal repayments of $2.8 million.

At December 31, 1997,  Citizens'  allowance for loan losses totaled $181,000,  a
$6,000  decline from the level  maintained at September 30, 1997.  Nonperforming
loans totaled  $76,000,  or .3% of the total loan portfolio at December 31 1997,
as  compared  to  nonperforming  loans of  $268,000,  or .9% of the  total  loan
portfolio at September 30, 1997. At December 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 December 31,
1997, 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 $30.7 million at December 31, 1997, an increase of $722,000, or
2.4%, over the $30.0 million of deposits outstanding at September 30, 1997. Such
increase  resulted  primarily  from  management's  efforts to increase  deposits
through marketing strategies.






                                        8



<PAGE>


                          London Financial Corporation

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


Discussion of Financial  Condition  Changes from  September 30, 1997 to 
  December 31, 1997 (continued)

Shareholders'  equity  totaled  $5.2 million at December 31, 1997, a decrease of
$2.4 million,  or 31.4%, from September 30, 1997,  levels. The decrease resulted
primarily  from  the $2.5  million,  or  $5.00  per  share,  return  of  capital
distribution  paid to LFC's  shareholders  in  November,  1997,  coupled  with a
regular  dividend  totaling  $31,000,  or $.06 per share,  which were  partially
offset by net earnings of $121,000.

Pursuant  to  regulations  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  December  31,  1997,
Citizens'  tangible and core capital totaled $6.0 million,  or 16.0% of adjusted
assets and exceeded the $565,000 and $1.1 million  requirements  by $5.4 million
and $4.9  million,  respectively.  Citizens'  risk-based  capital  totaled  $6.2
million and exceeded the requirement by $4.6 million.


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

General

Net  earnings  for the three month  period  ended  December  31,  1997,  totaled
$121,000, an increase of $26,000, or 27.4%, over the comparable 1996 period. The
increase in earnings resulted  primarily from a $38,000 increase in net interest
income and a $7,000 increase in other income,  which were partially  offset by a
$4,000  increase  in  general,  administrative  and other  expense and a $13,000
increase in the federal income tax provision.

Net Interest Income

Interest income on loans and mortgage-backed securities increased by $90,000, or
14.2%,  for the three months ended  December 31, 1997,  as compared to the three
months ended December 31, 1996. The increase was primarily due to a $1.3 million
increase in the weighted  average  portfolio  balance  outstanding year to year,
coupled with an increase in yield.  Interest income on investment securities and
other interest-earning assets decreased by $11,000, or 18.0%, due primarily to a
decrease in yields available on short-term deposits.

Interest  expense on deposits  increased by $22,000,  or 6.3%,  during the three
months ended  December 31, 1997.  This increase  resulted  primarily from a $1.8
million  increase  in the  weighted  average  balance of  deposits  outstanding.
Interest  expense on  borrowings  increased  by  $19,000,  or 271.4%,  due to an
increase in  borrowings  outstanding  during the period,  as LFC  borrowed  $1.4
million to  partially  fund the  special  $5.00 per share  distribution  paid in
November 1997.



                                        9


<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 December 31, 
  1997 and 1996 (continued)

Net Interest Income (continued)

As a result of the foregoing  changes in interest  income and interest  expense,
net  interest  income  increased by $38,000,  or 10.7%,  during the three months
ended  December  31, 1997,  as compared to the three  months ended  December 31,
1996. The interest rate spread totaled  approximately 3.25% for the three months
ended  December 31, 1997,  compared to 2.86% for the same period in 1996,  while
the net interest margin increased to approximately 4.04% in the 1997 period from
3.80% 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 Citizen's loan  portfolio.  The
provision for losses on loans totaled $2,000 for the three months ended December
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 $22,000 during the three months ended December 31, 1997, an
increase of $7,000, or 46.7% over the same period in 1996. The increase resulted
primarily  from a  $6,000  gain  realized  upon  the  call  of a  $500,000  U.S.
Government agency bond. 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 approximately $4,000, or
1.9%,  during the three  months ended  December  31, 1997,  as compared to 1996,
reflecting the $13,000, or 72.2%, decline in federal deposit insurance premiums,
due to lower  premium  rates  during  the  quarter,  while  all  other  expenses
increased by $17,000, or 8.9%.

Federal Income Taxes

The provision for federal income taxes  increased by $13,000,  or 26.5%,  during
the three  months  ended  December  31,  1997,  due  primarily to an increase in
earnings  before income taxes of $39,000,  or 27.1%.  LFC's  effective tax rates
amounted to 33.9% and 34.0% during the three months ended  December 31, 1997 and
1996, respectively.




                                       10


<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 December 31, 
  1997 and 1996 (continued)

Other Matters

As with all 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 is working
with the companies that supply or service its information  technology systems to
identify and remedy any year 2000 related problems.

As of the date of this Form  10-QSB,  Citizens has not  identified  any specific
expenses  that are  reasonably  likely to be incurred by Citizens in  connection
with this issue and does not expect to incur  significant  expense to  implement
the necessary  corrective  measures.  No assurance can be given,  however,  that
significant  expense will not be incurred in future  periods.  In the 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.

In addition  to possible  expense  related to its own  systems,  LFC 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.


















                                       11



<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

               On January 22, 1998, the Annual Meeting of LFC's Shareholders was
               held.  Each of the four  directors  nominated  (John  I.  Andrix,
               Rodney A. Bell,  John J.  Bodle,  and  Shirley C.  Hansgen)  were
               elected to terms expiring in 2000 by the following vote:

                       For:  349,296                        Withheld:  1,000

               One other matter was submitted to the shareholders, for which the
               following votes were cast:

                    Ratification  of the  appointment  of Grant  Thornton LLP as
                    independent  auditors  of LFC  for  the  fiscal  year  ended
                    September 30, 1998.

                       For:  349,296                         Withheld:  1,000

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 three
                                            months ended December 31, 1997.







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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:     February 6, 1998                   By: /s/John J. Bodle
      ------------------------------             ----------------
                                                 John J. Bodle
                                                 President and
                                                 Chief Executive Officer



Date:     February 6, 1998                   By: /s/Joyce E. Bauerle
      ------------------------------             -------------------
                                                 Joyce E. Bauerle
                                                 Treasurer and
                                                 Principal Accounting Officer

































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