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, 1998            
                               ---------------------------------------

                                       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  February  10,  1999,  the  latest   practicable  date,  479,450  of  the
registrant's common shares, without par value, were issued and outstanding.









                               Page 1 of 14 pages

<PAGE>


                          London Financial Corporation

                                      INDEX

                                                                          Page

PART I  - FINANCIAL INFORMATION

          Consolidated Statements of Financial Condition                      3

          Consolidated Statements of Earnings                                 4

          Consolidated Statements of Other 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                                                  13

SIGNATURES                                                                   14



<PAGE>

<TABLE>

                          London Financial Corporation

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


                                                                            December 31,       September 30,
         ASSETS                                                                     1998                1998
<S>                                                                                <C>                  <C>
Cash and due from banks                                                          $   471             $   507
Interest-bearing deposits in other financial institutions                          3,177               1,271
                                                                                  ------              ------
         Cash and cash equivalents                                                 3,648               1,778

Investment securities designated as available
  for sale - at market                                                               121                 121
Mortgage-backed securities - at amortized
  cost, approximate market value of $2,488 and $2,733
  as of December 31, 1998 and September 30, 1998                                   2,474               2,703
Loans receivable - net                                                            32,952              32,588
Office premises and equipment - at depreciated cost                                  384                 374
Stock in Federal Home Loan Bank - at cost                                            293                 288
Accrued interest receivable                                                          240                 216
Prepaid expenses and other assets                                                     23                  60
Prepaid federal income taxes                                                          -                   16
                                                                                  ------              ------

         Total assets                                                            $40,135             $38,144
                                                                                  ======              ======

         LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits                                                                         $33,658             $31,300
Advances from the Federal Home Loan Bank                                           1,300               1,800
Other liabilities                                                                    192                 155
Accrued federal income taxes                                                          17                  - 
Deferred federal income taxes                                                         40                  26
                                                                                  ------              ------
         Total liabilities                                                        35,207              33,281

Shareholders' equity
  Common stock - authorized 5,000,000 shares without par
    value; 529,000 shares issued                                                      -                   - 
  Additional paid-in capital                                                       2,391               2,391
  Retained earnings - substantially restricted                                     4,011               3,946
  Unrealized losses on securities designated as available
    for sale, net of related tax effects                                             (26)                (26)
  Shares acquired by Employee Stock Ownership Plan                                  (381)               (381)
  Shares acquired by Management Recognition Plan                                    (264)               (264)
  Less 49,550 treasury shares - at cost                                             (803)               (803)
                                                                                  ------              ------
         Total shareholders' equity                                                4,928               4,863
                                                                                  ------              ------

         Total liabilities and shareholders' equity                              $40,135             $38,144
                                                                                  ======              ======
</TABLE>





                                        3



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                       CONSOLIDATED STATEMENTS OF EARNINGS

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


                                                                        1998                1997
<S>                                                                     <C>                  <C>
Interest income
  Loans                                                                 $720                $665
  Mortgage-backed securities                                              40                  57
  Investment securities                                                   -                    3
  Interest-bearing deposits and other                                     33                  47
                                                                         ---                 ---
         Total interest income                                           793                 772

Interest expense
  Deposits                                                               380                 371
  Borrowings                                                              29                  26
                                                                         ---                 ---
         Total interest expense                                          409                 397
                                                                         ---                 ---

         Net interest income                                             384                 375

Provision for losses on loans                                              9                   2
                                                                         ---                 ---

         Net interest income after provision for
           losses on loans                                               375                 373

Other income
  Gain on investment securities transactions                              -                    6
  Other operating                                                         20                  16
                                                                         ---                 ---
         Total other income                                               20                  22

General, administrative and other expense
  Employee compensation and benefits                                     151                 112
  Occupancy and equipment                                                 21                  17
  Federal deposit insurance premiums                                       5                   5
  Franchise taxes                                                         22                   4
  Data processing                                                         15                  14
  Other operating                                                         40                  60
                                                                         ---                 ---
         Total general, administrative and other expense                 254                 212
                                                                         ---                 ---

         Earnings before income taxes                                    141                 183

Federal income taxes
  Current                                                                 34                 152
  Deferred                                                                14                 (90)
                                                                         ---                 ---
         Total federal income taxes                                       48                  62
                                                                        ----                 ---

         NET EARNINGS                                                   $ 93                $121
                                                                         ===                 ===

         EARNINGS PER SHARE
           Basic                                                        $.21                $.26
                                                                         ===                 ===

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


                                        4


<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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


                                                                             1998                1997
<S>                                                                          <C>                  <C>
Net earnings                                                                 $ 93                $121

Other comprehensive income, net of tax:
  Unrealized holding gains on securities during
    the period                                                                 -                    8

Reclassification adjustment for gains included in net earnings                 -                   (4)
                                                                              ---                 ---

Comprehensive income                                                         $ 93                $125
                                                                              ===                 ===

</TABLE>

































                                        5



<PAGE>

<TABLE>

                          London Financial Corporation
<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

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


                                                                                1998              1997
<S>                                                                             <C>               <C>
Cash flows provided by (used in) operating activities:
  Net earnings for the period                                                 $   93             $  121
  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                                                  9                  2
    Amortization of deferred loan origination fees                               (44)               (35)
    Depreciation and amortization                                                  7                  5
    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                                                (24)                11
      Prepaid expenses and other assets                                           37                 16
      Other liabilities                                                           37                (24)
      Federal income taxes
        Current                                                                   33                 46
        Deferred                                                                  14                (90)
                                                                               -----              -----
         Net cash provided by operating activities                               157                 94

Cash flows provided by (used in) investing activities:
  Proceeds from maturity of investment securities                                 -                 506
  Principal repayments on mortgage-backed securities                             229                 94
  Principal repayments on loans                                                3,299              2,843
  Loan disbursements                                                          (3,628)            (2,276)
  Purchase of office equipment                                                   (17)                (3)
                                                                               -----              -----
         Net cash provided by (used in) investing activities                    (117)             1,164

Cash flows provided by (used in) financing activities:
  Net increase in deposit accounts                                             2,358                722
  Repayments of advances from the Federal Home Loan Bank                        (500)                - 
  Proceeds from other borrowed money                                              -               1,400
  Distributions paid on common shares                                            (28)            (2,564)
                                                                               -----              -----
         Net cash provided by (used in) financing activities                   1,830               (442)
                                                                               -----              -----

Net increase in cash and cash equivalents                                      1,870                816

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

Cash and cash equivalents at end of period                                    $3,648             $4,480
                                                                               =====              =====

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

    Interest on deposits and borrowings                                       $  409             $  378
                                                                               =====              =====


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


                                        6


<PAGE>


                          London Financial Corporation

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          For the three month periods ended December 31, 1998 and 1997


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 three month period ended  December 31, 1998,  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 32,725  unallocated  ESOP shares,  totaled 446,725 for the three
month period ended  December 31, 1998.  Weighted-average  common  shares  deemed
outstanding,  which gives  effect to 37,736  unallocated  ESOP  shares,  totaled
472,694 for the three month period ended December 31, 1997.

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 465,207 for the three month period
ended  December 31, 1998,  and 486,808 for the three month period ended December
31, 1997.

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  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.



                                        7


<PAGE>


                          London Financial Corporation

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

          For the three month periods ended December 31, 1998 and 1997


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 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.  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.  SFAS No. 131 is not  expected to have a 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 December
31, 1998

At December 31, 1998, LFC had total assets of $40.1 million, an increase of $2.0
million,  or 5.2%,  over  September 30, 1998.  The increase in assets was funded
primarily by a $2.4 million, or 7.5%, increase in deposits.

Cash and interest-bearing  deposits totaled $3.6 million at December 31, 1998, a
$1.9 million, or 105.2%, increase over the total at September 30, 1998.

Investment securities and mortgage-backed securities decreased by $229,000, to a
total of $2.6 million at December 31, 1998,  reflecting  principal repayments on
mortgage-backed securities.

Loans receivable  increased by $364,000,  or 1.1%, as loan disbursements of $3.6
million exceeded principal repayments of $3.3 million. Loan disbursements during
the  three  month  period  ended  December  31,  1998,  exceeded  the  volume of
disbursements for the same period in 1997 by $1.4 million, or 59.4%.

At December 31, 1998,  Citizens'  allowance  for loan losses  totaled  $210,000,
compared to the $201,000 level maintained at September 30, 1997. Citizens had no
nonperforming  loans at December 31, 1998,  compared to  nonperforming  loans of
$268,000, or .82% of the total loan portfolio at September 30, 1998. At December
31, 1998,  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,  1998,   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  $33.7  million at  December  31,  1998,  an  increase of $2.4
million,  or 7.5%,  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.

Advances  from the Federal  Home Loan Bank  amounted to $1.3 million at December
31, 1998, a decrease of $500,000,  or 27.8%,  from September 30, 1998.  Proceeds
from deposit growth were used to repay such advances during the period.

                                        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 December
31, 1998 (continued)

Shareholders'  equity  totaled $4.9 million at December 31, 1998, an increase of
$65,000,  or 1.3%,  over  September  30, 1998,  levels.  The  increase  resulted
primarily from net earnings of $93,000,  which were partially  offset by regular
dividends totaling $28,000, or $.06 per share.

At December 31,  1998,  Citizens  was  required to maintain  regulatory  capital
sufficient to meet certain minimum capital  standards  promulgated by the Office
of Thrift Supervision. As of December 31, 1998, Citizens' regulatory capital was
well in excess of such minimum capital requirements.


Comparison of Operating Results For the Three Month Periods Ended December 31,
1998 and 1997 

General

Net  earnings  for the three month  period  ended  December  31,  1998,  totaled
$93,000,  a decrease of $28,000,  or 23.1%, from the comparable 1997 period. The
decrease in earnings resulted  primarily from a $7,000 increase in the provision
for losses on loans and a $42,000 increase in general,  administrative and other
expense, which were partially offset by a $9,000 increase in net interest income
and a $14,000 decrease in the provision for federal income taxes.

Net Interest Income

Interest income on loans for the three months ended December 31, 1998, increased
by $55,000,  or 8.3%,  compared to the three months ended December 31, 1997. The
increase  was  primarily  due to an  approximate  $3.6  million  increase in the
weighted-average   balance  outstanding.   Interest  income  on  mortgage-backed
securities  decreased by $17,000,  or 29.8%,  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 $17,000, or
34.0%.

Interest  expense on deposits  increased  by $9,000,  or 2.4%,  during the three
months  ended  December 31,  1998.  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 $3,000, or 11.5%,  during the three
months ended  December 31, 1998. 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 $9,000,  or 2.4%, during the three months ended
December 31, 1998, compared to the three months ended December 31, 1997.




                                       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,
1998 and 1997 (continued)

Other Income

Other income totaled  $20,000 during the three months ended December 31, 1998, a
decrease of $2,000,  or 9.1%,  from the three month  period  ended  December 31,
1997.  The  decrease  resulted  primarily  from  a  $6,000  gain  on  investment
securities  transactions  in the 1997 period,  which was  partially  offset by a
$4,000, or 25.0%,  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 $42,000, or 19.8%, during
the three months ended  December  31, 1998,  compared to 1997.  The increase was
primarily  comprised of a $39,000, or 34.8%,  increase in employee  compensation
and  benefits,  due  primarily  to an increase in staffing  levels year to year,
coupled  with  normal  merit  increases,  coupled  with an $18,000  increase  in
franchise tax expense year to year.

Federal Income Taxes

The provision for federal income taxes decreased by $14,000,  or 22.6%,  for the
three month period ended December 31, 1998, compared to the same period in 1997.
LFC's  effective  tax rates  amounted to 34.0% and 33.9% during the three months
ended December 31, 1998 and 1997, 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 is 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 May 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 is in the process of upgrading its existing teller
operating  system with a capital expense budget of $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.

                                       11


<PAGE>


                          London Financial Corporation

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


Year 2000 Compliance Matters (continued)

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.

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.



















                                       12



<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 28,  1999,  the Annual  Meeting of LFC's  Shareholders  was
          held.  Each of the three  directors  nominated  (Donovan  D.  Forrest,
          Edward D.  Goodyear  and  Kennison  A.  Sims)  were  elected  to terms
          expiring in 2001 by the following vote:

          For:  319,687                           Withheld:  0

          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, 1999.

               For:  306,900                      Withheld:  0


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 three
                                          months ended  December 31, 1998.




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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 10, 1999                     By: /s/John J. Bodle  
      -------------------------                    ---------------------------
                                                   John J. Bodle
                                                   President and
                                                   Chief Executive Officer



Date:    February 10, 1999                     By: /s/Joyce E. Bauerle 
      -------------------------                    ---------------------------
                                                   Joyce E. Bauerle
                                                   Treasurer and
                                                   Principal Accounting Officer

































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