SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB

(x)      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 1999

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

         For the transition period from                    to
                                        ------------------    ------------------

                        Commission File Number 333-63987

                          VILLAGE FINANCIAL CORPORATION
                   ------------------------------------------
             (Exact name of Registrant as specified in its Charter)

            New Jersey                                       22-3562091
-------------------------------                         ----------------------
(State or other jurisdiction of                           I.R.S. Employer
 incorporation or organization)                         Identification Number

590 Lawrence Square Boulevard, Lawrenceville, New Jersey            08648
--------------------------------------------------------            -----
(Address of principal executive offices)                           (Zip Code)

Registrant's telephone number, including area code:  (609) 689-1010
                                                     --------------

                  Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Securities  Exchange Act of 1934 during the
past 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.

                                X  Yes               No
                               ---               ---

         As of August 9, 1999,  there  were  94,850  shares of the  Registrant's
common stock,  par value $0.10 per share,  outstanding.  The  Registrant  has no
other classes of common equity outstanding.

                  Transitional small business disclosure format:

                                    Yes            X  No
                                ---               ---



<PAGE>

                          VILLAGE FINANCIAL CORPORATION
                            LAWRENCEVILLE, NEW JERSEY

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                       PAGE
                                                                                       ----
PART I -       FINANCIAL INFORMATION

Item 1.        Financial Statements
<S>                                                                                     <C>
   Balance Sheet - (Unaudited) as of
   June 30, 1999 and December 31, 1998...................................................3

   Statement  of  Operations -  (Unaudited)  for   the   three   months   ended
   June 30, 1999 and 1998 and for the period  from  January 16, 1998 (inception)
   to June 30, 1999......................................................................4

   Statement  of  Operations -  (Unaudited)  for   the   six   months   ended
   June 30, 1999 and 1998 and for the period from January 16, 1998 (inception)
   to June 30, 1999......................................................................5

   Statements of Cash Flows - (Unaudited) for the six months ended June 30, 1999
   and 1998 and for the period from January 16, 1998 (inception)
   to June 30, 1999......................................................................6

   Notes to Unaudited Financial Statements...............................................7

Item 2.        Management's Discussion and Analysis or
               Plan of Operation.........................................................8

PART II - OTHER INFORMATION

Item 1.        Legal Proceedings.........................................................9

Item 2.        Changes in Securities and Use of Proceeds.................................9

Item 3.        Defaults Upon Senior Securities...........................................9

Item 4.        Submission of Matters to a Vote of Security Holders.......................9

Item 5.        Other Information.........................................................9

Item 6.        Exhibits and Reports on Form 8-K..........................................9

SIGNATURES
</TABLE>

                                        2

<PAGE>



Part I.        FINANCIAL INFORMATION


Item 1.        Financial Statements
               --------------------

                          VILLAGE FINANCIAL CORPORATION
                                  BALANCE SHEET

<TABLE>
<CAPTION>
                                                                               June 30, 1999          December 31, 1998
                                                                            --------------------   ------------------------
                                                                                (Unaudited)
<S>                                                                                   <C>                        <C>
ASSETS
         Cash                                                                          $ 29,685                   $ 16,475
         Short-term investments                                                          27,270                    418,312
         Premises and equipment                                                         181,401                    140,123
         Deferred offering costs                                                        220,130                    114,894
         Other assets                                                                   106,182                    103,428
                                                                            --------------------   ------------------------

                 Total assets                                                         $ 564,668                  $ 793,232
                                                                            ====================   ========================


LIABILITIES
         Accounts payable and accrued expenses                                         $ 82,818                   $ 38,358
                                                                            --------------------   ------------------------


STOCKHOLDERS' EQUITY
         Preferred stock, no par value;
              1,000,000 authorized; none outstanding                                          -                          -
         Common stock, par value $.10;
              5,000,000 shares authorized;
              94,850 shares issued and outstanding                                        9,485                      9,485
         Additional paid-in-capital                                                     939,015                    939,015
         Retained deficit                                                              (466,650)                  (193,626)
                                                                            --------------------   ------------------------

                 Total stockholders' equity                                             481,850                    754,874
                                                                            --------------------   ------------------------

                 Total liabilities and stockholders' equity                           $ 564,668                  $ 793,232
                                                                            ====================   ========================
</TABLE>



                                        3

<PAGE>

                                       VILLAGE FINANCIAL CORPORATION
                                          STATEMENT OF OPERATIONS
                                                (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                             Period From
                                                        Three Months      Three Months    January 16, 1998
                                                          Ended             Ended          (Inception) to
                                                      June 30, 1999     June 30, 1998       June 30, 1999
                                                      ---------------   ---------------   ------------------
<S>                                                         <C>               <C>                 <C>
INCOME
        Interest                                             $ 1,279           $ 4,522             $ 22,559
        Other                                                      -                 -                  100
                                                      ---------------   ---------------   ------------------
              Total income                                     1,279             4,522               22,659
                                                      ---------------   ---------------   ------------------

EXPENSES
        Salaries and employee benefits                        68,691                 -              226,824
        Occupancy and equipment                               32,084                 -               91,529
        Professional services                                  2,098            21,505               96,546
        Other                                                 10,059               582               74,110
                                                      ---------------   ---------------   ------------------

              Total expenses                                 112,933            22,087              489,009
                                                      ---------------   ---------------   ------------------

Loss before income taxes                                    (111,654)          (17,565)            (466,350)
Income taxes                                                    (300)                -                 (300)
                                                      ---------------   ---------------   ------------------

NET LOSS                                                  $ (111,954)        $ (17,565)          $ (466,650)
                                                      ===============   ===============   ==================

LOSS PER SHARE                                               $ (1.18)              N/A              $ (4.92)

AVERAGE SHARES OUTSTANDING                                    94,850               N/A               94,850 (1)

</TABLE>

     (1)From May 20, 1998, the date of issuance.

        See accompanying notes to the financial statements.


                                        4

<PAGE>
                                        VILLAGE FINANCIAL CORPORATION
                                            STATEMENT OF OPERATIONS
                                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                               Period From
                                            Six Months                Six Months             January 16, 1998
                                               Ended                     Ended                (Inception) to
                                           June 30, 1999             June 30, 1998            June 30, 1999
                                       ----------------------    ----------------------   -----------------------

<S>                                                 <C>                       <C>                      <C>
INCOME
        Interest                                     $ 4,363                   $ 4,530                  $ 22,559
        Other                                            100                         -                       100
                                       ----------------------    ----------------------   -----------------------
              Total income                             4,463                     4,530                    22,659
                                       ----------------------    ----------------------   -----------------------

EXPENSES
        Salaries and employee benefits               150,357                         -                   226,824
        Occupancy and equipment                       64,143                         -                    91,529
        Professional services                         11,485                    31,505                    96,546
        Other                                         51,202                       582                    74,110
                                       ----------------------    ----------------------   -----------------------

              Total expenses                         277,188                    32,087                   489,009
                                       ----------------------    ----------------------   -----------------------

Loss before income taxes                            (272,724)                  (27,557)                 (466,350)
Income taxes                                            (300)                        -                      (300)
                                       ----------------------    ----------------------   -----------------------

NET LOSS                                          $ (273,024)                $ (27,557)               $ (466,650)
                                       ======================    ======================   =======================

LOSS PER SHARE                                       $ (2.88)                      N/A                   $ (4.92)

AVERAGE SHARES OUTSTANDING                            94,850                       N/A                    94,850 (1)

</TABLE>

     (1)From May 20, 1998, the date of issuance.

        See accompanying notes to the financial statements.


                                       5
<PAGE>
                          VILLAGE FINANCIAL CORPORATION
                             STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                                 Period From
                                                                        Six months          Six months         January 16, 1998
                                                                           ended               ended            (Inception) to
                                                                       June 30, 1999       June 30, 1998         June 30, 1999
                                                                       -----------------   -----------------   --------------------

OPERATING INCOME
<S>                                                                         <C>                  <C>                   <C>
      Net loss                                                               $ (273,024)          $ (27,557)            $ (466,650)
      Adjustments to reconcile net loss to net cash
      used for operating activities:
           Depreciation and amortization                                         15,789                   -                 20,892
           Net increase in prepaid organization expenses                          9,752                   -                (77,818)
                                                                       -----------------   -----------------   --------------------
                Net cash used for operating activities                         (247,483)            (27,557)              (523,576)
                                                                       -----------------   -----------------   --------------------

INVESTING ACTIVITIES
      Purchase of premises and equipment                                        (72,535)                  -               (217,761)
                                                                       -----------------   -----------------   --------------------

FINANCING ACTIVITIES
      Deferred offering costs paid                                              (45,401)                  -               (137,795)
      Proceeds from sale of common stock                                              -             948,500                948,500
      Advances from organizers      (1)                                               -                   -                      -
                                                                       -----------------   -----------------   --------------------
                Net cash provided by (used for) financing activities            (45,401)            948,500                810,705
                                                                       -----------------   -----------------   --------------------

                Increase (decrease) in cash and cash equivalents               (365,419)            920,943                 69,368

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                434,787                   -                      -
                                                                       -----------------   -----------------   --------------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $ 69,368           $ 920,943               $ 69,368
                                                                       =================   =================   ====================
</TABLE>



                                       6

<PAGE>



                          VILLAGE FINANCIAL CORPORATION
                     NOTES TO UNAUDITED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

         The accompanying  unaudited financial  statements have been prepared in
accordance  with  the  instructions  to  Form  10-QSB  and,  therefore,  do  not
necessarily  include all information that would be included in audited financial
statements.  The information furnished reflects all adjustments that are, in the
opinion  of  management,  necessary  for a  fair  statement  of the  results  of
operations.  All such  adjustments are of a normal recurring  nature.  As of the
date of these financial statements,  Village Financial Corporation's ("Company")
operations  have been  limited  to  in-formation  procedures:  raising  capital,
recruiting officers and staff,  obtaining banking facilities and working towards
obtainment  of  regulatory  approval.  Since  the  Company's  planned  principal
operations have not yet been commenced,  no significant revenue has been derived
therefrom.  The results of operations for the interim periods are not indicative
of the  results  that may be  expected  for a full year and could be  materially
different if the company was not an "in-formation" entity and operation.


                                        7

<PAGE>



Item 2.           Management's Discussion and Analysis or Plan of Operation
                  ---------------------------------------------------------

         Cautionary Statement

           Certain  statements  contained  in this  filing are  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995,  such  statements  relating to  financial  results and plans for future
business development activities, and are thus prospective.  Such forward-looking
statements are subject to risks,  uncertainties  and other factors,  which could
cause  actual  results to differ  materially  from future  results  expressed or
implied by such  forward-looking  statements.  Potential risks and uncertainties
include,  but are not limited to;  economic  conditions,  competition  and other
uncertainties  detailed  from  time  to  time in the  Company's  Securities  and
Exchange Commission filings.

         Plan of Operation

         Since February 3, 1999,  Village Financial  Corporation (the "Company")
had been offering a minimum of 425,000 and a maximum of 1,200,000  shares of its
common stock, par value $.10 per share, for a purchase price of $10.00 per share
in a  subscription  offering  (the  "Subscription  Offering")  pursuant  to  its
Registration  Statement on Form SB-2 (File No. 333-63987)  declared effective by
the  Securities  and  Exchange  Commission  ("SEC") on  February  3,  1999.  The
Subscription Offering expired March 26, 1999, but was extended by the Company. A
new termination  date for the  Subscription  Offering was not established by the
Company. The Subscription Offering could not extend, however, beyond November 6,
1999,  without  regulatory  approval.  As of August 9,  1999,  the  Company  had
received  subscriptions  for  191,422  shares of common  stock,  well  below its
minimum  offering  amount of 425,000  shares.  In addition,  the amount of stock
subscribed  for is  insufficient  to  provide  the  minimum  amount  of  initial
regulatory capital to complete  the  organization  of Village Bank, the proposed
Federal savings bank to be wholly-owned by the Company (the "Bank").

         The Company  previously raised $948,500 in a private offering of 94,850
shares of its common stock at a purchase price of $10.00 per share.  These funds
were used to pay for the offering costs and preopening  expenses of the Bank and
were  substantially  exhausted as of August 9, 1999.  As a result,  on August 9,
1999, the Board of Directors of the Company terminated the Subscription Offering
and subsequently directed the Company's Escrow Agent to refund all subscriptions
received.  The  Company  is  currently  exploring  the  possible  sale of all or
substantially  all of its  assets and the  dissolution  and  liquidation  of the
Company.  The Company  will not continue to seek the  organization  of the Bank.
There  can be no  assurance  that  the  Company  will be able to find a buyer or
dispose of all or substantially all of its assets.



                                        8

<PAGE>



Part II. OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

         None.

Item 2.  Changes in Securities and Use of Proceeds
         -----------------------------------------

          (d)  Use of Proceeds

               (3)  (i)  the Subscription Offering was terminated as of August
                         9, 1999;

                    (ii) There  have  been  no   offering   proceeds   from  the
                         Subscription  Offering paid to the Company to date. The
                         Company's Escrow Agent has been directed by the Company
                         to refund all subscriptions.

Item 3.  Defaults Upon Senior Securities
         -------------------------------
         None

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
         --------------------------------

         (a) None.

         (b) Reports on Form 8-K

             None.



                                        9

<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.

                                       VILLAGE FINANCIAL CORPORATION


Date: August 9, 1999           By   /s/Kenneth J. Stephon
                                    --------------------------------------------
                                    Kenneth J. Stephon, President
                                    (Principal Executive and Accounting Officer)



                                       10