<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, DC  20549
                  ____________________________________________

                                  FORM 10-QSB



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

        For the quarterly period ended March 31, 1997


                                     OR


   [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE
       ACT OF 1934

       FOR THE TRANSITION PERIOD FROM ______________ to _______________

                         Commission File Number 0-24898


                              MSB FINANCIAL, INC.
             (Exact name of registrant as specified in its charter)


          DELAWARE                                         38-3203510
-------------------------------                 -------------------------------
(State or other jurisdiction of                 (I.R.S. Employer Identification
incorporation or organization)                  Number)

PARK AND KALAMAZOO AVENUE, N.E., MARSHALL, MICHIGAN                  49068
---------------------------------------------------               ------------
(Address of principal executive offices)                           (ZIP Code)


Registrant's telephone number, including area code:     (616) 781-5103
                                                         -------------

     Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]       No [ ]

As of  May 9, 1997, there were 629,036 shares of the Registrant's common stock
issued and outstanding.

Transitional Small Business Disclosure Format (check one)

Yes [ ]       No [X]



<PAGE>   2



                              MSB FINANCIAL, INC.

                                     INDEX



PART I. FINANCIAL INFORMATION............................................     1

Item 1. Financial Statements (Unaudited).................................     1

Consolidated Condensed Statements of Financial Condition.................     1
Consolidated Condensed Statements of Income..............................     2
Consolidated Condensed Statements of Shareholders' Equity................   3-4
Consolidated Condensed Statements of Cash Flows..........................   5-6
Notes to Consolidated Condensed Financial Statements.....................   7-9

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations.......................... 10-12

PART II.    OTHER INFORMATION............................................ 13

            SIGNATURES................................................... 14

            EXHIBIT INDEX................................................ 15



<PAGE>   3


            CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
                       March 31, 1997  and June 30, 1996



<TABLE>
<CAPTION>
                                                                    March 31,    June 30,      
                                                                      1997         1996        
                                                                   -----------  -----------    
<S>                                                                <C>          <C>            
                                                                   (Unaudited)                 
ASSETS                                                                                         
    Cash and due from financial institutions                        $1,686,679   $2,122,384    
    Interest-bearing deposits                                        5,746,192       57,676    
                                                                   -----------  -----------    
        Total cash and cash equivalents                              7,432,871    2,180,060    
                                                                                               
    Securities available for sale                                                 2,118,157    
    Securities held to maturity (fair value of $12,543 at                                      
     March 31,1997 and $1,016,926 at June 30,1996)                      12,543    1,016,381    
    Loans, net                                                      64,333,797   52,327,685    
    Loans held for sale                                              1,175,925      957,018    
    Federal Home Loan Bank stock                                     1,043,700      316,700    
    Premises and equipment, net                                        589,090      530,182    
    Accrued interest receivable                                        391,663      332,240    
    Other assets                                                       650,122      352,072    
                                                                   -----------  -----------    
                                                                                               
        Total Assets                                               $75,629,711  $60,130,495    
                                                                   ===========  ===========    
                                                                                               
LIABILITIES AND SHAREHOLDERS' EQUITY                                                           
Liabilities                                                                                    
    Deposits                                                       $41,376,730  $40,452,058    
    Federal Home Loan Bank Advance                                  20,873,600    6,000,000    
    Advance payments by borrowers for                                                          
     taxes and insurance                                               264,997      406,201    
    Accrued interest payable                                            74,592       44,332    
    Accrued expenses and other liabilities                             475,621      633,560    
                                                                   -----------  -----------    
          Total Liabilities                                         63,065,540   47,536,151    
                                                                                               
Shareholders' equity                                                                           
    Preferred stock, $.01 par value:  2,000,000 shares                                         
     authorized; none outstanding                                                              
    Common stock, par value $.01:  4,000,000 shares                                            
     authorized; 741,507 shares issued and outstanding                                         
     at March 31, 1997 and 740,785 shares issued and                                           
     outstanding at June 30, 1996                                        7,415        7,408    
    Additional paid-in capital                                       7,077,208    7,017,760    
    Retained earnings, substantially restricted                      8,181,758    7,870,150    
    Net unrealized loss on securities available for sale,                                      
     net of tax benefit of $19,382 at June 30                                       (37,622)   
                                                                   -----------  -----------    
                                                                    15,266,381   14,857,696    
    Unallocated Employee Stock Ownership Plan shares                  (400,278)    (451,399)   
    Unearned Recognition and Retention Plan shares                    (223,087)    (254,200)   
    Less cost of Common Stock in Treasury- 111,471 shares at                                   
     March 31 and 85,219 shares at June 30                          (2,078,845)  (1,557,753)   
                                                                   -----------  -----------    
          Total Shareholders' Equity                                12,564,171   12,594,344    
                                                                   -----------  -----------    
                                                                                               
        Total Liabilities and Shareholders' Equity                   $75,629,711  $60,130,495    
                                                                   ===========  ===========    
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                       1


<PAGE>   4


                  CONSOLIDATED CONDENSED STATEMENTS OF INCOME
           Nine months and three months ended March 31, 1997 and 1996
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                             Nine Months                      Three Months         
                                                       ------------------------          -----------------------   
                                                          1997         1996                 1997         1996      
                                                       -----------  -----------          -----------   ---------   
<S>                                                    <C>          <C>                  <C>           <C>         
Interest and dividend income                                                                                       
    Loans, including fees                              $3,892,199   $3,166,036           $1,365,410   $1,092,783   
    Securities available for sale                          28,179      111,592                            45,558   
    Securities held to maturity                             5,455       37,937                  226       14,435   
    Other interest and dividends                           87,044      146,231               28,152       27,366   
                                                       ----------   ----------           ----------   ----------   
                                                        4,012,877    3,461,796            1,393,788    1,180,142   
Interest Expense                                                                                                   
    Deposits                                            1,153,947    1,162,526              381,198      376,430   
    Federal Home Loan Bank Advance                        468,802       21,784              207,623       21,784   
    Escrows                                                 4,257                             1,502                
                                                       ----------   -----------          ----------   ----------   
                                                        1,627,006    1,184,310              590,323      398,214   
                                                       ----------   ----------           ----------   ----------   
                                                                                                                   
NET INTEREST INCOME                                     2,385,871    2,277,486              803,465      781,928   
                                                                                                                   
Provision for loan losses                                  27,000       18,000                9,000        6,000   
                                                       ----------   ----------           ----------   ----------   
                                                                                                                   
NET INTEREST INCOME AFTER PROVISION                                                                                
 FOR LOAN LOSSES                                        2,358,871    2,259,486              794,465      775,928   
                                                                                                                   
Non-interest income                                                                                                
    Loan servicing fees                                    64,722       71,082               21,167       23,931   
    Gain on sales of loans                                 24,501       30,390                8,766       15,194   
    Service fees on deposit accounts                       93,648       69,542               35,316       24,307   
    Loss on sale of securities available                                                                           
     for sale                                             (47,950)                          (12,203)               
    Other                                                  93,485       77,579               36,816       27,017   
                                                       ----------   ----------           ----------   ----------   
                                                          228,406      248,593               89,862       90,449   
Non-interest expense                                                                                               
    Salaries and employee benefits                        626,050      554,965              214,100      196,908   
    Buildings, occupancy and equipment                    147,383      126,725               48,178       45,203   
    Data processing                                       121,131      107,709               43,300       40,083   
    Federal deposit insurance premiums                     65,171       85,428               12,164       28,849   
    Director fees                                          90,216       80,520               28,722       28,622   
    Correspondent bank charges                             42,770       37,671               14,593       12,844   
    Michigan Single Business tax                           41,550       42,450               16,000       14,500   
    Provision (recovery) to adjust loans held                                                                      
     for sale to lower of cost or market                    7,615       (8,539)              21,260       17,451   
    SAIF special assessment                               268,752                                                  
    Other                                                 358,598      302,772              108,659       98,080   
                                                       ----------   ----------           ----------   ----------   
                                                        1,769,236    1,329,701              506,976      482,540   
                                                       ----------   ----------           ----------   ----------   
                                                                                                                   
INCOME BEFORE FEDERAL INCOME                                                                                       
 TAX EXPENSE                                              818,041    1,178,378              377,351      383,837   
                                                                                                                   
Federal income tax expense                                281,500      401,500              132,000      131,500   
                                                       ----------   ----------           ----------   ----------   
                                                                                                                   
NET INCOME                                             $  536,541   $  776,878           $  245,351      252,337   
                                                       ==========   ==========           ==========   ==========   
                                                                                                                   
Earnings per common and common                                                                                     
 equivalent share                                      $     0.87   $     1.16           $     0.40         0.39   
                                                       ==========   ==========           ==========   ==========   
                                                                                                                   
Average common and common                                                                                          
 equivalent shares outstanding                            613,590      669,959              607,520      651,822   
                                                       ==========   ==========           ==========   ==========   
</TABLE>




     See accompanying notes to consolidated condensed financial statements.
                                       2


<PAGE>   5


           CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                   Nine months ended March 31, 1997 and 1996
                                  (Unaudited)




<TABLE>
<CAPTION>
                                                                                                             Net Unrealized   
                                                                         Additional                       Loss on Securities  
                                                          Common          Paid-In           Retained      Available for Sale, 
                                                          Stock           Capital           Earnings          Net of Tax      
                                                         --------        ----------        ----------     ------------------- 
<S>                                                       <C>            <C>               <C>                  <C> 
BALANCE, JULY 1, 1995                                      $7,220        $6,674,977        $7,139,068            $ (41,474)   
                                                                                                                              
Net income                                                                                    776,878                         
                                                                                                                              
Shares committed to be released (5,131 shares)                                                                                
 under the Employee Stock Ownership Plan (ESOP)                              35,917                                           
                                                                                                                              
Issuance of 18,772 shares of restricted stock                                                                                 
 under the Recognition and Retention                                                                                          
 Plan (RRP)                                                   188           293,125                                           
                                                                                                                              
Shares earned under the RRP                                                                                                   
                                                                                                                              
Cash dividends declared on common stock, net                                                                                  
 of dividends on unallocated ESOP Shares                                                     (198,174)                        
                                                                                                                              
Repurchase of 64,981 shares of Common Stock                                                                                   
                                                                                                                              
Adjustment of cost on initial public offering                                 1,742                         
                                                                                                                              
Change in unrealized loss on securities                                                                                       
 available for sale                                                                                                 10,089    
                                                           ------        ----------        ----------            ---------    
                                                                                                                              
BALANCES, MARCH 31, 1996                                   $7,408        $7,005,761        $7,717,772            $ (31,385)   
                                                           ======        ==========        ==========            =========    


<CAPTION>                                                
                                                           Unallocated        Unearned
                                                          Employee Stock    Recognition      Common            Total
                                                            Ownership      and Retention    Stock in       Shareholders'
                                                           Plan Shares      Plan Shares     Treasury          Equity
                                                           -----------     -------------  ------------     -------------
<S>                                                        <C>          <C>            <C>           <C>            
                                                         
                                                         
                                                         
BALANCE, JULY 1, 1995                                        (519,850)                                     $13,259,941
                                                                                                                      
Net income                                                                                                     776,878
                                                                                                                      
Shares committed to be released (5,131 shares)                                                                        
under the Employee Stock Ownership Plan (ESOP)                 51,310                                           87,227
                                                                                                                      
Issuance of 18,772 shares of restricted stock                                                                         
 under the Recognition and Retention                                                                                  
 Plan (RRP)                                                                  (293,313)                                
                                                                                                                      
Shares earned under the RRP                                                    24,445                           24,445
                                                                                                                      
Cash dividends declared on common stock, net                                                                          
 of dividends on unallocated ESOP Shares                                                                      (198,174)
                                                                                                                      
Repurchase of 64,981 shares of Common Stock                                              (1,214,637)        (1,214,637)
                                                                                                                      
Adjustment of cost on initial public offering                                                                    1,742
                                                                                                                      
Change in unrealized loss on securities                                                                               
 available for sale                                                                                             10,089
                                                           -----------  -------------  ------------        -----------
                                                                                                                      
BALANCES, MARCH 31, 1996                                   $ (468,540)      $(268,868)  $(1,214,637)       $12,747,511
                                                           ==========   =============  ============        ===========

</TABLE>





                                  (Continued)
                                       3


<PAGE>   6


           CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
                   Nine months ended March 31, 1997 and 1996
                                  (Unaudited)




<TABLE>
<CAPTION>
                                                                                                            Net Unrealized      
                                                                       Additional                           Loss on Securities  
                                                     Common             Paid-In             Retained        Available for Sale, 
                                                      Stock             Capital             Earnings           Net of Tax       
                                                    --------          ----------          ----------       -------------------  
<S>                                                  <C>             <C>                 <C>                   <C>              
BALANCES, JULY 1, 1996                              $  7,408          $7,017,760          $7,870,150             $(37,622)      
                                                                                                                                
Net income                                                                                   536,541                            
                                                                                                                                
Shares committed to be released (5,112 shares)                                                                                  
under the Employee Stock Ownership Plan (ESOP)                            46,007                                                
                                                                                                                                
Issuance of 722 shares of restricted stock                                                                                      
 under the RRP                                             7              13,441                                                
                                                                                                                                
Shares earned under the RRP                                                                                                     
                                                                                                                                
Cash dividends declared on common stock, net                                                                                    
 of dividends on unallocated ESOP shares                                                    (224,933)                           
                                                                                                                                
Repurchase of 26,252 shares of Common Stock                                                                                      

Change in unrealized loss on securities                                                                                         
 available for sale                                                                                                37,622       
                                                    --------          ----------          ----------             --------       
                                                                                                                                
BALANCES, MARCH 31, 1997                            $  7,415          $7,077,208          $8,181,758             $      0       
                                                    ========          ==========          ==========             ========       

<CAPTION>
                                                          
                                                          Unallocated        Unearned
                                                         Employee Stock     Recognition       Common         Total
                                                           Ownership       and Retention    Stock in    Shareholders'
                                                          Plan Shares       Plan Shares     Treasury       Equity
                                                        --------------    -------------  ------------  -------------
<S>                                                      <C>              <C>            <C>            <C>   
BALANCES, JULY 1, 1996                                      $(451,399)     $(254,200)   $(1,557,753)   $12,594,344
                                                                           
Net income                                                                                                 536,541
                                                                           
Shares committed to be released (5,112 shares)                             
under the Employee Stock Ownership Plan (ESOP)                 51,121                                       97,128
                                                                           
Issuance of 722 shares of restricted stock                                 
 under the RRP                                                               (13,448)
                                                                           
Shares earned under the RRP                                                   44,561                        44,561
                                                                           
Cash dividends declared on common stock, net                               
 of dividends on unallocated ESOP shares                                                                  (224,933)
                                                                           
Repurchase of 26,252 shares of Common Stock                                                (521,092)      (521,092)

Change in unrealized loss on securities                                    
 available for sale                                                                                         37,622
                                                           ----------   ------------   ------------  -------------
                                                                           
BALANCES, MARCH 31, 1997                                   $ (400,278)     $(223,087)  $ (2,078,845)   $12,564,171
                                                           ==========   ============   ============  =============


</TABLE>




     See accompanying notes to consolidated condensed financial statements.
                                       4


<PAGE>   7


                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   Nine months ended March 31, 1997 and 1996
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                    1997              1996      
                                                                ------------       -----------  
<S>                                                             <C>                <C>          
CASH FLOWS FROM OPERATING ACTIVITIES                                                            
    Net income                                                     $536,541          $776,878   
    Adjustments to reconcile net income                                                         
     to net cash from operating activities                                                      
        Provision for loan losses                                    27,000            18,000   
        Provision (recovery) to adjust loans held                                               
         for sale to lower of cost or market                          7,615            (8,539)  
        Depreciation                                                 77,490            67,375   
        Net amortization of premium                                     396             3,070   
        Employee Stock Ownership Plan expense                        97,128            87,227   
        Recognition and Retention Plan expense                       44,561            24,445   
        Originations of loans for sale                           (1,871,946)       (3,755,695)  
        Proceeds from sales of loans originated for sale          1,622,438         4,655,831   
        Gain on sales of loans originated for sale                  (24,500)          (30,380)  
        Loss on sales of securities available for sale               47,950                     
        Stock dividend on securities available for sale                               (13,696)   
        Change in assets and liabilities                                                        
             Accrued interest receivable                            (59,423)          (67,811)  
             Loss on disposal of equipment                            1,384                     
             Other assets                                          (269,482)         (230,636)  
             Accrued interest payable                                30,260               124   
             Other liabilities                                     (157,939)          (45,489)  
                                                               ------------       -----------   
                 Net cash from operating activities                 109,473         1,480,704   
                                                                                                
CASH FLOWS FROM INVESTING ACTIVITIES                                                            
    Proceeds from sale of securities available for sale           2,079,261                     
    Proceeds from maturities of securities available for sale                         500,000   
    Purchases of securities held to maturity                                       (1,005,312)  
    Proceeds from maturities of securities held to maturity       1,000,000                     
    Principal paydowns on mortgage-backed  securities                 3,442             4,510   
    Purchase of FHLB stock                                         (727,000)                    
    Net increase in loans                                       (11,985,626)       (6,317,987)  
    Purchases of premises and equipment                            (137,782)         (231,963)  
    Proceeds from sale of premises and equipment                                       13,660   
                                                               ------------       -----------   
        Net cash used in investing activities                    (9,767,705)       (7,037,092)  
</TABLE>





                                  (Continued)
                                       5



<PAGE>   8


                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   Nine months ended March 31, 1997 and 1996
                                  (Unaudited)



<TABLE>
<CAPTION>
                                                                           1997               1996       
                                                                        ----------         -----------   
<S>                                                                     <C>                <C>           
CASH FLOWS FROM FINANCING ACTIVITIES                                                                     
    (Decrease) in advance payments                                                                       
    by borrowers for taxes and insurance                                $ (141,204)         $ (111,812)  
    Net increase in deposits                                               924,672           1,426,144   
    Proceeds from Federal Home Bank Advance                             14,873,600           2,000,000   
    Payment of dividends on common stock                                  (224,933)           (198,174)  
    Repurchase of Common Stock                                            (521,092)         (1,214,637)  
    Other                                                                                        1,742   
                                                                        ----------         -----------   
        Net cash from financing activities                              14,911,043           1,903,263   
                                                                        ----------         -----------   
                                                                                                         
Net change in cash and cash equivalents                                  5,252,811          (3,653,125)  
                                                                                                         
Cash and cash equivalents at beginning of period                         2,180,060           5,823,872   
                                                                        ----------         -----------   
                                                                                                         
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $7,432,871          $2,170,747   
                                                                        ==========         ===========   
                                                                                                         
Supplemental disclosures of cash flow information                                                        
    Cash paid during the period for:                                                                     
        Interest                                                        $1,592,489          $1,184,185   
        Income taxes                                                       352,299             452,000   
Supplemental disclosure of noncash investing activities                                                  
    Transfer from loans held for sale to loans held to maturity            $47,486            $447,093   
</TABLE>






     See accompanying notes to consolidated condensed financial statements.
                                       6



<PAGE>   9

                             MSB FINANCIAL, INC.
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                       Nine months ended March 31, 1997
                                 (Unaudited)





NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated condensed financial statements include the
accounts of MSB Financial, Inc. (the "Company") and its wholly-owned
subsidiary, Marshall Savings Bank, F.S.B. ("Bank") after the elimination of
significant intercompany transactions and accounts.  The initial capitalization
of the Company and its acquisition of the Bank took place on February 6, 1995.

These interim financial statements are prepared in accordance with the
Securities and Exchange Commission's rules for quarterly financial information
without audit and reflect all adjustments which, in the opinion of management,
are necessary to present fairly the financial position of the Company at March
31, 1997 and the results of its operations and its cash flows for the periods
presented.  All such adjustments are normal and recurring in nature.  The
accompanying consolidated condensed financial statements do not purport to
contain all the necessary disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances and should be
read in conjunction with the consolidated financial statements and notes
thereto included in the annual report of MSB Financial, Inc. for the year ended
June 30, 1996.  The results of the periods presented are not necessarily
representative of the results of operations and cash flows which may be
expected for the entire year.

The provision for income taxes is based upon the effective tax rate expected to
be applicable for the entire year.

Earnings per common share for the periods presented in 1997 and 1996
were computed by dividing net income by the weighted average number of common
shares outstanding and common share equivalents which would arise from
considering dilutive stock options, less Employee Stock Ownership Plan (ESOP)
shares not committed to be released.  Net income was $536,541 and $245,351 for
the nine month and three month periods ended March 31, 1997, respectively.  The
weighted average number of shares outstanding for the nine and three month
periods were 613,590 and 607,520, respectively.   For the nine month and three
month periods ended March 31, 1996, respectively, net income was $776,878 and
$252,337.  The weighted average number of shares outstanding for the nine and
three month periods ended March 31, 1996 were 669,959 and 651,822,
respectively.

NOTE 2 - REPURCHASES OF COMMON STOCK

On November 17, 1995 the Company received a "no objection" letter from the
Office of Thrift Supervision to repurchase up to 9% (64,981 shares) of its
common stock in the open market over a twelve month period.  As of March 31,
1996 the Company had completed the repurchase program with a total of 64,981
shares at an average price of $18.69 per share.  On April 22, 1996, the Company
received OTS approval to repurchase up to 5%  (33,790 shares) of its common
stock.  As of  January 31, 1997, the Company had completed this repurchase
program with a total of 33,890 shares at an average price of $17.70 per share.
On February 11, 1997, the Company received OTS approval to repurchase up to 5%
(32,132 shares) of its common stock. As of March 31, 1997, 12,600 shares had
been repurchased at an average price of $20.97 and therefore the Company has
remaining approval to repurchase up to 19,432 shares.  Approval to repurchase
these shares expires on February 11, 1998.






                                  (Continued)
                                       7


<PAGE>   10

                              MSB FINANCIAL, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                        Nine months ended March 31, 1997
                                  (Unaudited)




NOTE 3 - ACCOUNTING STANDARDS IMPLEMENTED IN FISCAL 1997

In March 1995, the FASB issued Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of (SFAS 121).  SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used, and for
long-lived assets and certain identifiable intangibles to be disposed of.  The
Statement requires review of such assets whenever events of changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  Measurement of an impairment loss for long-lived assets and
identifiable intangibles that an entity expects to hold and use should be based
on the fair value of the asset.  The Statement is effective for financial
statements for fiscal years beginning after December 15, 1995.  The Company
adopted SFAS No. 121 effective July 1, 1996.  Its adoption had no material
effect on the Company's consolidated financial position or results of
operations for the nine months ended March 31, 1997.

In May 1995, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 122, Accounting for Mortgage Servicing
Rights (SFAS 122).  This Statement changes the accounting for mortgage
servicing rights retained by the loan originator.  Under this Statement, an
entity that acquires mortgage servicing rights through either the purchase or
origination of mortgage loans and sells or securities those loans with
servicing rights retained should allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loans (without the mortgage servicing
rights) based on their relative fair values.  Under current practice, all such
cost are assigned to the loan.  The cost allocated to mortgage servicing rights
are to be recorded as a separate asset and amortized in proportion to, and over
the life of, the net servicing income.  The carrying value of the mortgage
servicing rights are to be periodically evaluated for impairment.  The
Statement become effective for the Company as of July 1, 1996.  The adoption of
SFAS No. 122 did not have a material effect on the Company's consolidated
financial position or results of operations for the nine months ended March 31,
1997.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based Compensation
(SFAS 123). SFAS No. 123 encourages, but does not require, entities to use a
fair value based method to account for stock-based compensation plans.  If the
fair value accounting encouraged by SFAS No. 123 is not adopted, entities must
disclose the pro forma effect on net income and on earnings per common share
had the fair value accounting been adopted.  The Corporation has elected to not
adopt SFAS No. 123.  However, the Company will provide any required proforma
disclosures in any future complete consolidated financial statements.  The
proforma disclosures are not required in noncomplete interim consolidated
financial statements.



                                  (Continued)
                                       8


<PAGE>   11

                              MSB FINANCIAL, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                        Nine months ended March 31, 1997
                                  (Unaudited)





The Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 125, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities (SFAS 125).  SFAS 125 is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996, and is to be applied prospectively.  Example
transactions covered by SFAS No. 125 include asset securitizations, repurchase
agreements, wash sales, loan participations, transfers of loans with recourse
and servicing of loans.  The Standard is based on a consistent application of a
financial-components approach that focuses on control.  The Statement provides
consistent standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings.  The Statements also requires
measuring instruments that have a substantial prepayment risk at fair value,
much like debt instrument classified as available for sale or trading.  While
SFAS No. 125 supersedes SFAS No. 122, Accounting for Mortgage Servicing, it
only marginally modifies the accounting and disclosure requirements described
by SFAS 122.

On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128), which is
effective for financial statements beginning with year end 1997.  SFAS 128
simplifies the calculation of earnings per share by replacing primary EPS with
basic EPS.  It also requires dual presentation of basic EPS and diluted EPS for
entities with complex capital structures.  Basic EPS includes no dilution and
is computed by dividing income available to common shareholders by the
weighted-average common shares outstanding for the period.  Diluted EPS
reflects the potential dilution of securities that could share in earnings,
such as stock options, warrants or other common stock equivalents.  The Company
expects SFAS 128 to have little impact on its earnings per share calculations
in future years, other than changing terminology from primary EPS to basic EPS.
All prior period EPS data will be restated to conform with the new
presentation.




                                       9



<PAGE>   12




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS 

     MSB Financial, Inc. (the "Company") was incorporated under the laws of the
State of Delaware for the purpose of becoming the savings and loan holding
company of Marshall Savings Bank, F.S.B. (the "Bank") in connection with the
Bank's conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank (the "Conversion").  On February 6, 1995 the
Conversion was completed and the Bank became a wholly-owned subsidiary of the
Company.  The following discussion compares the consolidated financial
condition of the Company and the Bank at March 31, 1997 to June 30, 1996 and
the results of operations for the three and nine month periods ended March 31,
1997 with the same periods ended March 31, 1996.  This discussion should be
read in conjunction with the consolidated condensed financial statements and
footnotes included herein.

Financial Condition

     Total assets increased $15.5 million to $75.6 million from June 30, 1996
to March 31, 1997.  Net loans, including loans held for sale, increased by
$12.2 million, or 22.9% for the period, due primarily to the Company's decision
to retain 15 year fixed rate residential loans in portfolio, and strong demand
for mortgage loans, especially residential 1-4 family construction loans, in
the Company's market area. This increase was funded by a $3.1 million, or 99.6%
decrease in securities available for sale and securities held to maturity, a
$925,000 increase in deposits and an increase of $14.9 million in Federal Home
Loan  Bank advances.  Securities available for sale decreased $2.1 million from
June 30, 1996 to March 31, 1997 due to sales during the period.  Securities
held to maturity decreased $1.0 million from June 30, 1996 to March 31, 1997
due to a maturing U.S. Treasury security.

     Total liabilities increased $15.5 million to $63.1 million from June
30, 1996 to March 31, 1997. Offsetting the increase in the FHLB advances
and deposits discussed above were advance payments by borrowers for taxes and
insurance which decreased $141,000, or 34.8%.  Interest payable and other
liabilities also decreased $128,000, or 18.8%.

     The repurchase of the Company's common stock, payment of dividends
declared on common stock, combined with a positive adjustment of net unrealized
loss on securities, and net income resulted in a net increase in shareholders'
equity of  $30,000.

Results of Operations

GENERAL.  The Company's results of operations depend primarily upon the level
of net interest income, which is the difference ("spread") between average
yield earned on loans and securities, interest-bearing deposits, and other
interest-earning assets, and the average rate paid on deposits and borrowed
funds, as well as competitive factors that influence interest rates, loan
demand, and deposit flows.  Results of operations are also dependent upon the
level of the Company's non-interest income, including fee income and service
charges, and the level of its non-interest expense, including general and
administrative expenses.  The Company, like other financial institutions, is
subject to interest rate risk to the degree that its interest-bearing
liabilities mature or reprice at different times, or on a different basis, than
its interest-earning assets.

NET INCOME.  Net income for the three months ended March 31, 1997 was $245,000,
2.8% lower than  net income of $252,000 for the same period in 1996.  Net
income for the nine month period ended March 31, 1997 was $537,000, 30.9% lower
than net income of $777,000 for the same period in 1996.  The decline in net
income for the nine month period ended March 31, 1997 was related to the
special assessment by the SAIF of $170,000, net of taxes.  Net income, without
the SAIF assessment, for the nine months ended March 31, 1997 was $707,000 as
compared to $777,000 for the same nine month period in 1996, resulting in a
decrease of $70,000, or 9.0%.

NET INTEREST INCOME.  Net interest income increased $22,000, or 2.8%, to
$803,000 for the three month period ended March 31, 1997.  For the nine month
period ended March 31, 1997 net interest income increased $108,000, or 4.8%, to
$2.4 million.  The increases in net interest income for the three month and
nine month periods ended March 31, 1997 compared to the same periods in 1996
were primarily a result of an increase in interest income.  Interest income
increased primarily due to the increase in net loans discussed above.  The
weighted average yield on the loan portfolio for the three month period ended
March 31, 1997 decreased 67 basis

                                       10



<PAGE>   13



points to 8.45% from 9.12% for the same period ended March 31, 1996.  For
the nine month period ended March 31, 1997 the weighted average yield on the
loan portfolio was 8.57%, compared to 9.09% for the same period last year, a
decrease of 52 basis points. The decreases in weighted average yield for the
periods discussed can be attributed to the increase in net loans held in 
portfolio during the periods, a significant portion of which are adjustable 
rate and 15 year mortgage loans, originated at interest rates below the
weighted average portfolio yield.  Interest expense increased $192,000 for the
three month period ended March 31, 1997 and increased $443,000 for the nine
month period ended March 31, 1997 compared to the same periods in 1996.  These
increases were attributable to interest paid on Federal Home Loan Bank advances
for the three month and nine month periods ended March 31, 1997 of $208,000 and
$469,000, respectively. 

PROVISION FOR LOAN LOSSES.  The provision for loan losses is a result of
management's periodic analysis of the adequacy of the allowance for loan
losses.  The provision for loan losses increased by $3,000 to $9,000 for the
three month period ended March 31, 1997 as compared to the three month period
ended March 31, 1996, due to the increase in size of the loan portfolio and
management's continuing reassessment of losses inherent in the loan portfolio.
At March 31, 1997 the Company's allowance for loan losses totaled $377,000 or
0.58% of net loans receivable and 48.6% of total non-performing loans.  At June
30, 1996, the Company's allowance for loan losses totaled $348,000, or 0.65% of
net loans receivable and 73.3% of total non-performing loans.

     Management establishes an allowance for loan losses based on an analysis
of risk factors in the loan portfolio.  This analysis includes the evaluation
of concentrations of credit, past loss experience, current economic conditions,
amount and composition of the loan portfolio, estimated fair value of
underlying collateral, loan commitments outstanding, delinquencies, and other
factors.  Because the Company has had extremely low loan losses during its
history, management also considers loss experience of similar portfolios in
comparable lending markets.  Accordingly, the calculation of the adequacy of
the allowance for loan losses was not based directly on the level of
non-performing assets.

     As of March 31, 1997, the Company's non-performing assets, consisting
of nonaccrual loans and accruing loans 90 days or more delinquent, totaled
$775,000, or 1.17% of total loans, compared to $475,000, or 0.89% of total
loans as of June 30, 1996, an increase of $300,000.  The increase can be
primarily attributed to two commercial real estate loans totaling $524,000,
which were accruing loans over 90 days delinquent at the end of the period.
Loans greater than 90 days past due, and other designated loans of concern, are
placed on non-accrual status, unless it is determined that the loans are well
collateralized and in the process of collection. Nonaccrual loans at the end
of the period consisted primarily of seven commercial business loans to a
single borrower totaling $96,000. There was no real estate owned as of March
31, 1997.

     Management will continue to monitor the allowance for loan losses and make
future additions to the allowance through the provision for loan losses as
economic conditions dictate.  Although the Company maintains its allowance for
loan losses at a level which it considers to be adequate to provide for losses,
there can be no assurance that future losses will not exceed estimated amounts
or that additional provisions for loan losses will not be required in future
periods.  In addition, management's determination as to the amount of the
allowance for loan losses is subject to review by the Office of Thrift
Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC), as part
of their examination process, which may result in the establishment of an
additional allowance based upon their judgment of the information available to
them at the time of their examination.

NON-INTEREST INCOME.  Non-interest income consists primarily of gains on the
sale of loans, gains or losses on sale of securities available for sale, loan
servicing fees, service fees on deposit accounts and other fees.  Non-interest
income decreased $1,000 during the three month period ended March 31, 1997
compared to the three month period ended March 31,1996. For the nine month
period ended March 31, 1997 non-interest income decreased $20,000 compared the
nine month period ended March 31, 1996.  The decline for the nine month period
ended March 31, 1997 was due primarily to a loss of $48,000 on the sale of
securities available for sale.  There were no other significant changes in the
components of non-interest income.

NON-INTEREST EXPENSE.  Non-interest expense was $507,000 for the three month
period ended March 31, 1997 compared to $483,000 reported for the same prior
year period, an increase of $24,000 or 5.0%.  For the nine month period  ended
March 31, 1997 non-interest expense was $1.8 million including the
non-recurring SAIF assessment of $269,000.  Non-interest expense without the
SAIF assessment was $1.5 million for the nine month period ended March 31,
1997, compared to $1.3 million for the same nine month period in 1996, an
increase of $200,000 or 15.4%.   Salaries and employee benefits, the largest
component of non-interest expense, increased $17,000 and $71,000 for the three
month and nine month periods ended March 31, 1997, respectively, compared to
the same periods during 1996.  Significant factors causing the increase in
salaries and employee benefits were 

                                      11


<PAGE>   14

the addition of two new employees and expenses associated with the Company's
Recognition and Retention Plan which was approved by shareholders in October,
1995. 

     Congress recently enacted the Deposit Insurance Fund Act of 1996 (the
"Act"), which brings major changes to the Federal Deposit Insurance System.
One such change will eliminate the Bank Insurance Fund ("BIF") and the SAIF,
the two insurance funds administered by the FDIC, by merging the two funds into
a single fund.  The Act call for a special assessment on SAIF-assessable
deposits to capitalize the SAIF and bring the fund into parity with the BIF.
On September 30, 1996, based on an assessment of 65.7 basis points on March 31,
1995 deposit balances (as required in the Act), the Company recorded a one-time
charge of $269,000, or $.044 per share, to per-tax earnings.  The Bank after
the recording of this charge to earnings still remains a well-capitalized
institution for regulatory purposes.

INCOME TAX EXPENSE.  Income tax expense increased $1,000 and decreased $120,000
for the three and nine month periods ended March 31, 1997 compared to the same
periods in 1996 due to the decrease in net income.  The Company's effective tax
rate remains at approximately 34%.

Liquidity and Capital Resources

     The Company's principal sources of funds are deposits, principal and
interest repayments on loans, sales of loans, interest-bearing deposits and
securities available for sale.  While scheduled loan repayments and maturing
investments are relatively predictable, deposit flows and early loan
prepayments are more influenced by interest rates, general economic conditions
and competition.

     Federal regulations have required the Bank to maintain minimum levels of
liquid assets.  The required percentage has varied from time to time based upon
economic conditions and savings flows and is currently 5% of net withdrawable
savings deposits and borrowings payable on demand or in one year or less during
the preceding calendar month.  Liquid assets for purposes of this ratio include
cash, certain time deposits, U.S. Government, government agency and other
securities and obligations generally having remaining maturities of less than
five years.  The Bank has maintained its liquidity ratio at levels in excess of
those required.  At March 31, 1997, the Bank's liquidity ratio was 5.22%.

     The Company uses its liquidity resources principally to meet ongoing
commitments, to fund maturing certificates of deposit and deposit withdrawals
and to meet operating expenses.  The Company anticipates that it will have
sufficient funds available to meet current loan commitments.  At March 31,
1997, the Company had outstanding commitments to extend credit which amounted
to $3.8 million (including $3.0 million in available home equity lines of
credit).  At March 31, 1997, the Company had $20.1 million in advances from the
FHLB of Indianapolis outstanding.  Management believes that loan repayments and
other sources of funds, including Federal Home Loan Bank borrowings, will be
adequate to meet the Company's foreseeable liquidity needs.

     At March 31, 1997 the Bank had tangible capital of $9.7 million, or 12.9 %
of adjusted total assets which was $8.6 million above the minimum capital
requirement of $1.1 million, or 11.4% of adjusted total assets.

     The Bank had at March 31, 1997, core capital of $9.7 million, or 12.9% of
adjusted total assets which was $7.5 million above the minimum capital
requirement of $2.2 million, or 9.9% of adjusted total assets.

     At March 31, 1997, the Bank had total risk based capital of $10.1 million
and risk weighted assets of $46.1 million or total risk based capital of 22.0%
of risk weighted assets.  This amount was $6.4 million above the minimum
regulatory requirement of $3.7 million, or 14.0% of risk weighted assets.


Accounting Changes
     See Note 3 to the accompanying condensed consolidated Financial
Statements.


                                       12



<PAGE>   15




                          PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities

         None.

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) Exhibits

               Exhibit 27 - Financial Data Schedule (electronic filing only)

         (b) Reports on Form 8-K

               None


                                       13



<PAGE>   16





     Pursuant to the requirement 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.

                                   SIGNATURES

                                            MSB FINANCIAL, INC.
                                            Registrant



Date: May 9, 1997                         \s\  Charles B. Cook
                                          -------------------------------------
                                          Charles B. Cook,  President and Chief
                                          Executive Officer  (Duly Authorized
                                          Officer)

Date: May 9, 1997                         \s\ Elaine R. Carbary
                                          -------------------------------------
                                          Elaine R. Carbary, Chief Financial
                                          Officer (Principal Financial Officer)

                                       14



<PAGE>   17



                              MSB FINANCIAL, INC.

                                 EXHIBIT INDEX


Exhibit No.           Description                           Page No.
-----------           -----------                           --------

  27                  Financial Data Schedule (electronic      16
                      filing only)

                                       15