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 March 31, 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 May 7,  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

                                                                          PAGE
                                                                          ----

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

   Balance Sheets - (Unaudited) as of
   March 31, 1999 and December 31, 1998.....................................3

   Statements of Operations - (Unaudited) for
   the three months ended March 31, 1999 and
   1998 and for the period from January 16, 1998
   (inception) to March 31, 1999............................................4

   Statements of Cash Flows - (Unaudited) for the
   three months ended March 31, 1999 and 1998 and
   for the period from January 16, 1998 (inception)
   to March 31, 1999........................................................5

   Notes to Unaudited Financial Statements..................................6

Item 2.  Management's Discussion and Analysis or
         Plan of Operation..................................................7

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings..................................................8

Item 2.  Changes in Securities and Use of Proceeds..........................8

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


<PAGE>


Part I.   FINANCIAL INFORMATION


Item 1.   Financial Statements


                          Village Financial Corporation
                                  Balance Sheet

<TABLE>
<CAPTION>

                                                                 March 31, 1999           December 31, 1998
                                                                 --------------           -----------------
                                                                  (Unaudited)
<S>                                                              <C>                        <C>       
ASSETS
   Cash                                                            $  59,312                  $  16,475 
   Short-term investments                                            138,404                    418,312
   Premises and equipment                                            199,631                    140,123
   Deferred offering costs                                           165,401                    114,894
   Other assets                                                       90,546                    103,428
                                                                    --------                   --------
                                                                                          
               Total assets                                        $ 653,294                  $ 793,232
                                                                    ========                   ========
                                                                                          
LIABILITIES                                                                               
   Accounts payable and accrued expenses                           $  59,091                  $  38,358
                                                                    --------                   --------
                                                                                          
STOCKHOLDERS' EQUITY                                                                      
   Preferred stock, no par value;                                                         
       1,000,000 authorized; none outstanding                              0                          0
   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                                                 (354,297)                  (193,626)
                                                                    --------                   --------
                                                                                          
Total stockholders' equity                                           594,203                    754,874
                                                                    --------                   --------
                                                                                          
Total liabilities and stockholders' equity                         $ 653,294                  $ 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
                                          March 31, 1999      March 31, 1998         March 31, 1999
                                          --------------      --------------        ----------------
<S>                                       <C>                  <C>                  <C>          
INCOME

   Interest                                 $   3,084            $       9            $  21,280    
                                                                                     
   Other                                          100                    0                  100
                                             --------             --------             --------
               Total income                     3,184                    9               21,380
                                             --------             --------             --------
EXPENSES                                                                             
                                                                                     
   Salaries and employee benefits              81,667                    0              158,133
                                                                                     
   Occupancy and equipment                     25,851                    0               59,046
                                                                                     
   Professional services                       39,955               10,000              110,029
                                                                                     
   Other                                       16,382                   13               48,469
                                             --------             --------             --------
               Total expenses                 163,855               10,013              375,677
                                             --------             --------             --------
Loss before income taxes                     (160,671)             (10,004)            (354,297)
                                                                                     
Income taxes                                        0                    0                    0
                                             --------             --------             --------
                                                                                     
NET LOSS                                    $(160,671)           $ (10,004)           $(354,297)
                                             ========             ========             ========
                                                                                     
LOSS PER SHARE                              $   (1.69)           $     N/A            $   (3.74)
                                                                                     
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 Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Period From
                                                                Three Months          Three Months        January 16, 1998
                                                                    Ended                Ended             (Inception) to
                                                               March 31, 1999        March 31, 1998        March 31, 1999
                                                               --------------        --------------       ----------------
<S>                                                           <C>                    <C>                   <C>        
OPERATING INCOME
   Net loss                                                     $ (160,671)            $ (10,004)            $ (354,297)
   Adjustments to reconcile net loss to net cash
   used for operating activities:
       Depreciation and amortization                                 6,299                     0                 11,402
       Net increase in prepaid organization
   expenses                                                         (2,976)                    0                (90,546)
                                                                 ---------             ---------              ---------
          Net cash used for operating activities                  (157,348)              (10,004)              (433,441)
                                                                 ---------             ---------              ---------

INVESTING ACTIVITIES
   Purchase of premises and equipment                              (65,807)                    0               (211,033)
                                                                 ---------             ---------              ---------

FINANCING ACTIVITIES
   Deferred offering costs paid                                    (13,916)                    0               (106,310)
   Proceeds from sale of common stock                                    0                     0                948,500
   Advances from organizers(1)                                           0                17,300                      0
                                                                 ---------             ---------              ---------
       Net cash provided by (used for) financing
       activities                                                  (13,916)               17,300                842,190
                                                                 ---------             ---------              ---------
       Increase (decrease) in cash and cash
       equivalents                                                (237,071)                7,296                197,716
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD                                                434,787                     0                      0
                                                                 ---------             ---------              ---------
CASH AND CASH EQUIVALENTS AT
 END OF PERIOD                                                  $  197,716            $    7,296             $  197,716
                                                                 =========             =========              =========
</TABLE>


(1)      During the second quarter of 1998, certain  organizers  received common
         stock, at $10 per share, in lieu of  reimbursement  for funds advanced.
         These funds advanced earned no interest.

See accompanying notes to the financial statements.

                                        5

<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.


                                       6

<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.  Village  Financial  Corporation  (the "Company") is
         conducting a  subscription  offering of 425,000 to 1,200,000  shares of
         its common  stock,  par value $.10 per share,  for a purchase  price of
         $10.00  per  share  (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 has not been set by the Company. The Subscription Offering may
         not  extend  beyond  December  7,  1999,   without  certain  regulatory
         approvals. 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 have been, and will continue to be, used to pay for
         the  offering  costs  and  preopening  expenses  of  Village  Bank  (in
         organization)  (the  "Bank"),  a proposed  Federal  savings  bank to be
         wholly-owned  by the Company.  The Company  anticipates  that the funds
         raised in the private  offering  will be exhausted by July 31, 1999, if
         the  Subscription  Offering has not been  completed on or prior to that
         date. If the Subscription  Offering has not been completed prior to the
         time the funds  received  in the private  offering  are  depleted,  the
         Company will attempt to secure additional funds from various sources to
         pay  for  the  continued   preopening  expenses  through  the  date  of
         completion  of the  Subscription  Offering.  However,  there  can be no
         assurance  that  Company  will be able to secure  additional  operating
         funds or that any funds obtained will be sufficient to cover preopening
         and  operating  expenses  through the  completion  of the  Subscription
         Offering.  Furthermore, the Company reserves the right to terminate the
         Subscription  Offering  at  any  time  prior  to  its  completion,   in
         accordance  with the terms  stated in the  Company's  Prospectus  dated
         February 3, 1999, and Prospectus Supplement dated March 12, 1999.

         Upon the  successful  completion of the  Subscription  Offering and the
         receipt of final  regulatory  approval,  the  Company  will  become the
         holding company for the Bank. The Bank will commence operations as soon
         as possible  thereafter.  There is no change to the anticipated plan of
         operation of the Company and the Bank as stated in the  Prospectus  and
         the Prospectus Supplement.

                                       7

<PAGE>

         Year 2000. A great deal of information has been disseminated  about the
         global  effect  the  year  2000 may have on  computers.  Many  computer
         programs  that can only  distinguish  the final two  digits of the year
         entered (a common  programming  practice in earlier years) are expected
         to read entries for the year 2000 as the year 1900 and compute payment,
         interest or delinquency  based on the wrong date, or are expected to be
         unable to compute payment, interest or delinquency.  Rapid and accurate
         data  processing  will  be  essential  to the  Bank's  operation.  Data
         processing is also essential to most other financial  institutions  and
         many other  companies.  A third party service  bureau will be providing
         the material  data  processing  that could be affected by this problem.
         The  Bank's   prospective   service   bureau  has  stated  that  it  is
         substantially  compliant  and it  expects  to  resolve  this  potential
         problem before the year 2000.  However, if the service bureau is unable
         to resolve all facets of this potential problem in time, the Bank would
         likely  experience  significant  data  processing  delays,  mistakes or
         failures.  These delays,  mistakes or failures could have a significant
         adverse  impact on the  Company's  financial  condition  and results of
         operation.  In order to determine  that the service bureau is year 2000
         compliant,  management has developed a test plan,  which is expected to
         be  completed  in the  first  half  of  1999.  The  Company  may  incur
         additional  operating  expenses  during the balance of 1999 relating to
         designing  and  performing  tests  of  the  Bank's  computer   systems.
         Management  does not expect  that the total costs that will be incurred
         to become year 2000  compliant  will be material to the Company and its
         proposed banking subsidiary.

Part II. OTHER INFORMATION

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

         None.

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

         (d) Use of Proceeds

               (1)  The  Company  filed a  Registration  Statement on Form  SB-2
                    (File No. 333-63987) which became effective February 3, 1999
                    relating to the Subscription Offering.

               (2)  The  Subscription  Offering  commenced immediately following
                    the effective date of the Registration Statement.

               (4)  (i)    the Subscription Offering has not yet terminated;

                    (iii)  the  offering  consists  of  shares  of the Company's
                           common stock;

                    (iv)   the Subscription Offering consists  of 425,000 shares
                           shares to  1,200,000  shares of the Company's  common
                           stock for a purchase price of

                                        8

<PAGE>



                           $10.00  per  share.  To  date  the  Company  has sold
                           122,560 shares ($1,225,600).

                    (v)    Expenses of the Subscription  Offering incurred  from
                           February 3, 1999 to March 31, 1999 which  were direct
                           or indirect  payments to others  were  accrued for as
                           of December 31, 1998, based  on reasonable  estimates
                           for such expenses.  These costs  approximate $160,000
                           and  cover  such  items as legal, marketing, printing
                           and registration services.  There  were no additional
                           expenses incurred during the three months ended March
                           31, 1999.

                    (vi)   There  have  been  no   offering   proceeds  from the
                           Subscription Offering  paid  to the Company  to date.
                           The  offering   proceeds  remain  in  escrow  pending
                           completion   or   termination  of   the  Subscription
                           Offering.

                    (vii)  See response to (vi).

                    (viii) See response to (vi).

Item 3.   Defaults Upon Senior Securities
          -------------------------------

          None

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

          On March 24, 1999, the Company held its annual meeting of stockholders
          (the "Meeting"). At the Meeting,  stockholders reelected Paul J. Russo
          and George M. Taber as  directors of the Company each for a three-year
          term and until their  successors are elected and  qualified.  No other
          business was conducted at the Meeting.

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: May 7, 1999              By   /s/Kenneth J. Stephon
                                    --------------------------------------------
                                    Kenneth J. Stephon, President
                                    (Principal Executive and Accounting Officer)