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 December 31, 1998

                                       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)


         Maryland                                             38-3203510
(State or other jurisdiction of                           (I.R.S. Employer 
incorporation or organization                             Identification 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 February 11, 1999, there were 1,309,621 shares of the Registrant's  common
stock issued and outstanding.



Transitional Small Business Disclosure Format (check one)

Yes [  ]       No [X]

<PAGE>



                               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
Consolidated Condensed Statements of Cash Flows......................   4
Notes to Consolidated Condensed Financial Statements.................   5

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations................6-10

PART II.          OTHER INFORMATION..................................  11

                  SIGNATURES.........................................  12

                  EXHIBIT INDEX......................................  13


<PAGE>
<TABLE>
<CAPTION>



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

                                             CONSOLIDATED  CONDENSED   STATEMENTS   OF
                                                  FINANCIAL  CONDITION  December
                                                    31, 1998 and June 30, 1998

----------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>               <C>

                                                                                 December 31,          June 30,
                                                                                     1998                1998
                                   (Unaudited)
ASSETS
     Cash and due from financial institutions                                   $     1,727,378    $      2,286,520
     Interest-bearing deposits                                                        1,738,467             994,193
                                                                                ---------------    ----------------
         Total cash and cash equivalents                                              3,465,845           3,280,713

     Securities held to maturity (fair value of $6,459 at
       December 31, 1998 and $8,102 at June 30, 1998)                                     6,459               8,102
     Loans held for sale                                                              2,777,555             295,300
     Loans receivable, net of allowance for loan losses of
       $417,093 at December 31, 1998 and $391,148 at June 30, 1998                   74,440,388          73,065,017
     Federal Home Loan Bank stock                                                     1,270,500           1,158,200
     Accrued interest receivable                                                        422,876             419,847
     Premises and equipment, net                                                        662,704             648,878
     Mortgage servicing rights                                                          267,220             177,006
     Other assets                                                                       947,293             913,650
                                                                                ---------------    ----------------

         Total Assets                                                           $    84,260,840    $     79,966,713
                                                                                ===============    ================

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
     Deposits                                                                   $    44,563,220    $     42,815,148
     Federal Home Loan Bank Advance                                                  25,163,279          21,971,976
     Advance payments by borrowers for taxes and insurance                              181,288             524,739
     Accrued interest payable                                                           106,865              93,114
     Accrued expenses and other liabilities                                             793,672           1,249,043
                                                                                ---------------    ----------------
              Total Liabilities                                                      70,808,324          66,654,020

Shareholders' equity
     Preferred stock, $.01 par value:  2,000,000 shares
       authorized; none outstanding
     Common stock, par value $.01: 4,000,000 shares authorized; 1,631,315 shares
       issued  and  1,313,141  shares  outstanding  at  December  31,  1998  and
       1,631,315 shares
        issued and 1,338,051 shares outstanding at June 30, 1998                         16,313              16,313
     Additional paid-in capital                                                       9,614,841           9,533,274
     Retained earnings, substantially restricted                                      7,347,846           6,970,925
     Unallocated Employee Stock Ownership Plan shares                                  (287,779)           (318,181)
        Unearned Recognition and Retention Plan shares                                 (116,050)           (146,728)
     Less cost of Common Stock in Treasury- 319,494 shares at
       December 31, 1998 and 293,264 shares at June 30, 1998                         (3,122,655)         (2,742,910)
                                                                                ----------------   -----------------
              Total Shareholders' Equity                                             13,452,516          13,312,693
                                                                                ---------------    ----------------

         Total Liabilities & Shareholders' Equity                               $    84,260,840    $     79,966,713
                                                                                ===============    ================
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                                           CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND
                                             COMPREHENSIVE  INCOME  Six months and three
                                               months ended December 31, 1998 and 1997
                                                              (Unaudited)

--------------------------------------------------------------------------------------------------------------------
                                                         Six Months                        Three Months
                                                         ----------                        ------------
                                                  1998              1997               1998               1997
                                                  ----              ----               ----               ----
<S>                                          <C>              <C>                <C>               <C>

Interest and dividend income
     Loans, including fees                   $    3,270,388    $    3,120,736     $    1,646,429    $     1,581,029
     Securities held to maturity                        241               365                115                175
     Other interest and dividends                   103,810           102,977             54,292             55,389
                                             --------------    --------------     --------------    ---------------
                                                  3,374,439         3,224,078          1,700,836          1,636,593
Interest Expense
     Deposits                                       815,809           791,560            412,868            399,951
     Federal Home Loan Bank Advance                 751,431           659,993            388,048            338,472
     Other interest expense                           7,188             4,764              3,753              2,563
                                             --------------    --------------     --------------    ---------------
                                                  1,574,428         1,456,317            804,669            740,986
                                             --------------    --------------     --------------    ---------------

Net interest income                               1,800,011         1,767,761            896,167            895,607

Provision for loan losses                            36,000            40,000             18,000             15,000
                                             --------------    --------------     --------------    ---------------

Net interest income after provision
  for loan losses                                 1,764,011         1,727,761            878,167            880,607

Non-interest income
     Loan servicing fees                             21,810            38,771              2,044             17,665
     Gain on sales of loans                         184,110           111,300            107,193             68,711
     Service fees on deposit accounts                86,439            75,976             42,878             41,372
     Profit on sale of real estate owned             26,967            10,666             26,967
     Other                                           90,195            68,716             46,033             35,997
                                             --------------    --------------     --------------    ---------------
                                                    409,521           305,429            225,115            163,745
Non-interest expense
     Salaries and employee benefits                 527,144           499,310            264,620            254,087
     Buildings, occupancy and equipment             139,189            99,202             71,005             49,167
     Data processing                                100,413            91,360             52,710             47,746
     Year 2000 expense                               15,367                                6,790
     Federal deposit insurance premiums              26,352            25,954             13,041             13,012
     Director fees                                   61,069            62,044             31,572             31,572
     Correspondent bank charges                      27,117            28,703             12,982             14,304
     Michigan Single Business tax                    36,000            35,000             19,000             17,000
     Advertising expense                             55,599            31,852             25,080             12,166
     Professional fees                               98,745            54,465             54,355             30,066
     Other                                          206,218           181,360            115,630            100,812
                                             --------------    --------------     --------------    ---------------
                                                  1,293,213         1,109,250            666,785            569,932
                                             --------------    --------------     --------------    ---------------
Income before federal income
  tax expense                                       880,319           923,940            436,497            474,420

Federal income tax expense                          315,000           325,000            156,000            166,000
                                             --------------    --------------     --------------    ---------------

Net income                                          565,319           598,940            280,497            308,420

Other comprehensive income                                0                 0                  0                  0
                                             --------------    --------------     --------------    ---------------

Comprehensive income                         $      565,319    $      598,940     $      280,497    $       308,420
                                             ==============    ==============     ==============    ===============

Basic earnings per share                     $         0.45    $         0.48     $         0.23     $         0.25
                                             ==============    ==============     ==============     ==============

Weighted average common shares outstanding        1,243,788         1,255,326          1,236,616          1,250,943
                                             ==============    ==============     ==============    ===============

Diluted earnings per share                   $         0.44    $         0.46     $         0.22    $          0.24
                                             ==============    ==============     ==============    ===============

Weighted average common and diluted
   Potential common shares outstanding            1,295,411         1,301,768          1,287,179          1,304,453
                                             ==============    ==============     ==============    ===============
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                                                  CONSOLIDATED   CONDENSED   STATEMENTS  OF
                                                      SHAREHOLDERS'  EQUITY  Six  months
                                                       ended December 31, 1998 and 1997
                                                                  (Unaudited)

                              ------------------------------------------------------------------------------------------
                                                                      Unallocated    Unearned   
                                                        Additional  Employee Stock Recognition     Common      Total
                                 Common       Paid-In   Retained      Ownership   and Retention   Stock in  Shareholders'
                                  Stock       Capital   Earnings     Plan Shares   Plan Shares    Treasury     Equity
                                  -----       -------   --------     -----------   -----------    --------     ------
<S>                            <C>         <C>          <C>         <C>          <C>          <C>          <C>

Balance, July 1, 1997            $  14,830  $ 7,096,776  $8,372,493  $ (383,006)  $ (208,084)  $(2,202,813)  $12,690,196

Net income                                                  598,940                                              598,940

Shares committed to be 
  released (7,128 shares)
  under the Employee Stock
  Ownership Plan (ESOP)                          72,360                  32,400                                  104,760

Shares earned under the RRP                                                           30,678                      30,678

Cash dividends declared 
  on common stock, net
  of dividends on unallocated
  ESOP Shares                                              (162,185)                                            (162,185)

Repurchase of 16,500 shares
  of Common Stock                                                                                 (225,000)     (225,000)

Issuance of 3,177 common 
  shares from treasury
  stock due to exercise 
  of stock option                                (3,791)                                            26,353        22,562
                                 ---------   ----------  ----------   ---------   ----------    ----------    ----------

Balances, December 31, 1997      $  14,830   $7,165,345  $8,809,248   $(350,606)  $ (177,406)  $(2,401,460)  $13,059,951
                                 =========   ==========  ==========   =========   ==========   ===========    ==========


Balances, July 1, 1998           $  16,313   $9,533,274  $6,970,925   $(318,181)  $(146,728)   $(2,742,910)  $13,312,693

Net income                                                  565,319                                              565,319

Shares committed to be 
  released (6,682 shares)
  under the Employee Stock
  Ownership Plan (ESOP)                          81,798                  30,402                                  112,200

Shares earned under the RRP                                                          30,678                       30,678

Cash dividends declared
  on common stock, net
  of dividends on 
  unallocated ESOP shares                                  (188,398)                                            (188,398)

Repurchase of 26,230 shares
  of Common Stock                                                                                (379,745)      (379,745)

Payment of Fractional 
  Shares on 10% Dividend                           (231)                                                            (231)
                                 ---------   ----------  ----------   ---------   ----------    ----------    ----------

Balances, December 31, 1998        $16,313   $9,614,841  $7,347,846   $(287,779)   $(116,050)  $(3,122,655)  $13,452,516
                                 =========   ==========  ==========   =========   ==========   ===========   ===========

</TABLE>


<PAGE>

<TABLE>
<CAPTION>

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

                                                       CONSOLIDATED CONDENSED STATEMENTS OF
                                                         CASH   FLOWS  Six  months   ended
                                                            December 31, 1998 and 1997
                                                                    (Unaudited)

------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                 <C>

                                                                                        1998              1997
                                                                                        ----              ----
Cash flows from operating activities
     Net income                                                                    $      565,319   $       598,940
     Adjustments to reconcile net income
       to net cash from operating activities
         Provision for loan losses                                                         36,000            40,000
         Depreciation                                                                      69,077            45,266
         Amortization of mortgage servicing rights                                         24,197             5,370
         Employee Stock Ownership Plan expense                                            112,200           104,760
         Recognition and Retention Plan expense                                            30,678            30,678
         Originations of loans held for sale                                          (14,030,959)       (6,402,472)
         Proceeds from sales of loans held for sale                                    11,508,431         6,345,916
         Net gains on sales of loans held for sale                                       (184,138)         (111,428)
         Change in assets and liabilities
              Accrued interest receivable                                                  (3,029)          (13,284)
              Other assets                                                                (33,643)           18,703
              Accrued interest payable                                                     13,751            12,607
              Other expense and other liabilities                                        (455,371)          227,995
                                                                                   ---------------  ---------------
                  Net cash from operating activities                                   (2,347,487)          903,051

Cash flows from investing activities
     Principal paydowns on mortgage-backed  securities                                      1,643             1,692
     Purchase of FHLB stock                                                              (112,300)          (19,400)
     Net increase in loans                                                             (1,301,371)       (2,872,462)
     Net purchases of premises and equipment                                              (82,903)          (93,534)
                                                                                   ---------------  ----------------
         Net cash used in investing activities                                         (1,494,931)       (2,983,704)

Cash flows from financing activities
     Net increase in deposits                                                      $    1,748,072   $       651,709
     Proceeds from Federal Home Bank advances                                           6,000,000        11,000,000
     Repayments on Federal Home Bank advances                                          (2,808,697)       (9,210,633)
     Decrease in advance payments
         by borrowers for taxes and insurance                                            (343,451)         (305,654)
     Payment of dividends on common stock                                                (188,629)         (162,185)
     Repurchase of common stock                                                          (379,745)         (225,000)
     Exercise of stock options                                                                               22,562
                                                                                   --------------   ---------------
         Net cash from financing activities                                             4,027,550         1,770,799
                                                                                   --------------   ---------------

Net change in cash and cash equivalents                                                   185,132          (309,854)

Cash and cash equivalents at beginning of period                                        3,280,713         3,080,612
                                                                                   --------------   ---------------

Cash and cash equivalents at end of period                                         $    3,465,845   $     2,770,758
                                                                                   ==============   ===============

Supplemental  disclosures of cash flow  information  Cash paid during the period
     for:
         Interest                                                                  $    1,560,677   $     1,438,946
         Income taxes                                                                     345,000           402,956
Supplemental disclosure of noncash investing activities
     Transfer from loans held for sale to loans held to maturity                   $      110,000

</TABLE>



<PAGE>

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

                               MSB FINANCIAL, INC.
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                        Six months ended December 31,1998
                                   (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
December 31, 1998 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,
1998. 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.

Basic and diluted earnings per share for the periods  presented in 1998 and 1997
were computed  under a new  accounting  standard  effective in the quarter ended
December 31, 1997.  Basic  earnings per share is based on net income  divided by
the weighted  average  number of common  shares  outstanding  during the period,
adjusted for Employee  Stock  Ownership  Plan (ESOP)  shares not  committed  for
release and Recognition and Retention Plan (RRP) shares not yet vested.  Diluted
earnings  per  share  shows the  dilutive  effect of  additional  common  shares
issuable under stock option plans.  Net income was $565,319 and $280,497 for the
six month and three month periods ended December 31, 1998. The weighted  average
number of common  shares  outstanding  for the six and three month periods ended
December 31, 1998,  were  1,243,788 and  1,236,616,  respectively.  The weighted
average of number of common and diluted potential common shares  outstanding for
the six and three months ended December 31, 1998,  were 1,295,411 and 1,287,179,
respectively. For the six month and three month periods ended December 31, 1997,
respectively,  net income was $598,940 and $308,420. The weighted average number
of common shares  outstanding for the six and three month periods ended December
31, 1997,  were  1,255,326 and  1,250,943,  respectively.  The weighted  average
number of common and diluted potential common shares outstanding for the six and
three month  periods ended  December 31, 1997,  were  1,301,768  and  1,304,453,
respectively.

NOTE 2 - REPURCHASES OF COMMON STOCK

During the quarter  ended  December 31,  1998,  the Company  repurchased  21,120
shares of its common stock at a total cost of $305,020,  or $14.44 per share, as
compared to 16,500 shares during the quarter ended December 31, 1997, at a total
cost of $225,000 or $13.64 per share. On February 11, 1997, the Company received
OTS approval to  repurchase  up to 5%, or 67,738  shares,  of its common  stock.
Approval to repurchase  these shares expired on February 11, 1999,  with a total
of 46,470 shares repurchased at a total cost of $688,055 or $14.81 per share. As
of December 31, 1998 a total of 322,671 shares of the Company's common stock had
been repurchased at a total cost of $3,149,000, or $9.76 per share.


<PAGE>


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.  On December 8, 1998 the Company  received  shareholders  approval  and
changed its state of  incorporation  from  Delaware to Maryland.  The  following
discussion compares the consolidated  financial condition of the Company and the
Bank at December 31, 1998 to June 30, 1998 and the results of operations for the
three and six month periods ended  December 31, 1998 with the same periods ended
December  31,  1997.  This  discussion  should be read in  conjunction  with the
consolidated condensed financial statements and footnotes included herein.



Forward-Looking Statements

         When used in this Quarterly  Report of Form 10-QSB or future filings by
the Company with the Securities and Exchange Commission,  in the Company's press
releases or other public or shareholder  communications,  or in oral  statements
made with the approval of an authorized  executive officer, the words or phrases
"will likely  result",  "are expected to", "will  continue",  "is  anticipated",
"estimated",  "project",  "believe"  or  similar  expressions  are  intended  to
identify  "forward-looking   statements"  within  the  meaning  of  the  Private
Securities  Litigation Reform Act of 1995. The Company wishes to caution readers
not to place undue reliance on any such forward-looking statements,  which speak
only as of the date made, and to advise readers that various  factors  including
regional and national  economic  conditions,  Year 2000 readiness of the Company
and its service  providers,  changes in levels of market interest rates,  credit
risks of lending activities, and competitive and regulatory factors could affect
the Company's financial performance and could cause the Company's actual results
for future periods to differ materially from those anticipated or projected.

         The  Company  does  not  undertake  and   specifically   disclaims  any
obligation to publicly  release the result of any revisions which may be made to
any  forward-looking  statements  to reflect the  occurrence of  anticipated  or
unanticipated events or circumstances after the date of such statements.


Financial Condition
         Total assets increased $4.3 million to $84.3 million from June 30, 1998
to December 31, 1998.  Net loans,  including  loans held for sale,  increased by
$3.9  million,  or 5.2% for the period,  due  primarily to the strong demand for
mortgage loans,  especially  residential 1-4 family  construction  loans, in the
Company's  market areas.  This  increase was primarily  funded by an increase of
$3.2 million in Federal Home Loan Bank advances.

         Total liabilities increased $4.2 million to $70.8 million from June 30,
1998 to December 31, 1998.  In addition to the increase in the Federal Home Loan
Bank advances  discussed  above,  were increases in deposits of $1.7 million and
accrued  interest  payable  of  $14,000.   Offsetting  the  above  increases  in
liabilities  for the period were decreases in advance  payments by borrowers for
taxes and insurance of $343,000 and accrued  expenses and other  liabilities  of
$455,000.

         The  repurchase  of the Company's  common  stock,  payment of dividends
declared  on  common  stock,  and  net  income  resulted  in a net  increase  in
shareholders' equity of $140,000.
<PAGE>

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 the 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  December  31,  1998 was
$280,000,  9.1% lower than net income of $308,000 for same period ended December
31,  1997.  Net income for the six month  period  ended  December  31,  1998 was
$565,000,  5.6% lower than net income of  $599,000  for the same period in 1997.
Reasons for the declinces in net income are discussed in detail below.

Net Interest Income.  Net interest income of $896,000 for the three month period
ended December 31, 1998 remained unchanged as compared to the three month period
ended  December 31, 1997.  For the six month period ended  December 31, 1998 net
interest income increased $32,000, or 1.8%, to $1.8 million. The increase in net
interest  income for the six month  period was  primarily  a result of a $63,000
increase in fee income for the 1998 period.  This increase in fee income was due
to increased  loan sales  during the six month  period  ended  December 31, 1998
which  resulted in a faster  acceleration  into income of deferred  loan fees as
compared  to the same period in 1997.  The  weighted  average  yield on the loan
portfolio for the three month period ended  December 31, 1998 decreased 24 basis
points to 8.59% from 8.83% for the same period ended  December 31, 1997. For the
six month period ended December 31, 1998 the weighted  average yield on the loan
portfolio  was 8.65%,  compared to 8.82% for the same period ended  December 31,
1997, a decrease of 17 basis points.  The decreases in weighted  average  yields
are the result of  adjustable  rate  mortgage  loans  renewing  at lower  rates.
Interest  expense  increased  $64,000 for three month period ended  December 31,
1998 and increased  $118,000 for the six month period ended December 31, 1998 as
compared to the same periods in 1997.  These  increases are  attributable  to an
increase in interest paid on Federal Home Loan Bank  advances,  due to increased
advance  balances,  for the three month and six month periods ended December 31,
1998 of $50,000 and  $91,000,  respectively,  when  compared to the same periods
ended December 31, 1997.

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 $18,000 for the three month
period  ended  December  31, 1998 as compared  to the three month  period  ended
December  31,  1997,  due to  management's  continuing  reassessment  of  losses
inherent in the loan portfolio. At December 31, 1998 the Company's allowance for
loan  losses  totaled  $417,000 or 0.54% of net loans  receivable  and 54.16% of
total  non-performing  loans. At June 30, 1998, the Company's allowance for loan
losses totaled  $391,000,  or 0.54% of net loans  receivable and 62.28% of total
non-performing loans.
<PAGE>

         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  December  31,  1998,  the  Company's   non-performing   assets,
consisting of nonaccrual  loans and accruing  loans 90 days or more  delinquent,
totaled  $770,000,  or 1.00% of total loans,  compared to $628,000,  or 0.86% of
total loans as of June 30, 1998, an increase of $142,000.  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. There was no real estate owned at December 31, 1998.

         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.

Noninterest  Income.  Noninterest income consists primarily of gains on the sale
of loans, loan servicing fees,  service fees on deposit accounts and other fees.
Noninterest  income  increased  $61,000  during  the three  month  period  ended
December 31, 1998  compared to the three month  period ended  December 31, 1997.
For the six month period ended December 31, 1998  noninterest  income  increased
$104,000 compared the six month period ended December 31, 1997. The increase for
the six month period ended December 31, 1998 was primarily due to an increase in
gains on sale of loans of $73,000,  due to  increased  sales of  mortgage  loans
during the period.  Other  increases  included  deposit  account service fees of
$10,000 and profit on sale of real estate owned of $16,000. Offsetting the above
mentioned  increases was a decrease in loan  servicing fee income of $17,000 for
the six month period  ended  December 31, 1998 as compared to the same period in
1997. This decrease is due to increased mortgage  refinancing activity which has
resulted in an increased  amortization  expense of mortgage servicing rights. No
other significant changes in the components of non-interest income.

Noninterest Expense. Noninterest expense was $667,000 for the three month period
ended  December 31, 1998  compared to $570,000  reported for the same prior year
period, an increase of $97,000 or 17.0%.  Noninterest  expense for the six month
period ended December 31, 1998 was $1.3 million compared to $1.1 million for the
same period in 1997, an increase of 16.6%.  Increases in noninterest expense for
the six  month  period  included increases in  professional  fees of $44,000,  a
result of the Company's recent  reincorporation  from a Delaware into a Maryland
corporation, and in building, occupancy and equipment expense of $40,000, due to
increased  depreciation  expense  for  software,  teller  operating  system  and
equipment upgrades.  The largest component on noninterest expense,  salaries and
employee  benefits,  increased  $11,000  and $28,000 for the three month and six
month  periods  ended  December  31,  1998,  respectively,  compared to the same
periods during 1997.  Significant  factors  causing the increase in salaries and
employee  benefits were the addition of another  full-time  employee during 1998
period and increases in expenses associated with the Company's benefit plans.

Income Tax Expense.  Income tax expense  decreased $10,000 for the three and six
month periods  ended  December 31, 1998 compared to the same periods in 1997 due
to the  decrease in net income.  The  Company's  effective  tax rate  remains at
approximately 34%.
<PAGE>

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  require  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 4% 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 December 31, 1998, the Bank's liquidity ratio was 7.45%.

         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 December 31,
1998, the Company had outstanding commitments to extend credit which amounted to
$4.8 million  (including $3.7 million in available home equity lines of credit).
At December 31, 1998, the Company had $25.2 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.

         Federal insured savings institutions are required to maintain a minimum
level  of  regulatory  capital.  The  OTS  has  established  capital  standards,
including a tangible  capital  requirement,  a leverage  ratio (or core capital)
requirement  and a risk-based  capital  requirement  applicable  to such savings
associations.  These capital  requirements must be generally as stringent as the
comparable  capital  requirements for national banks. The OTS is also authorized
to  impose  capital  requirements  in excess of these  standards  on  individual
associations on a case-by-case basis.

         As of  December  31,  1998,  the Bank had  tangible  capital and Tier 1
(core)  capital of $10.0 million,  or 11.8% or adjusted total assets,  which was
approximately  $8.7 million and $7.5 million above the minimum  requirements  of
1.5% and 3.0%,  respectively,  of the  adjusted  total  assets in effect on that
date.  As of  December  31,  1998,  the Bank had Tier 1 (core)  capital of $10.0
million, or 11.9% of average total assets,  which was approximately $6.6 million
above the minimum  requirement of 4.0% of average total assets in effect on that
date.  On December 31, 1998,  the Bank had  risk-based  capital of $10.4 million
(including $10.0 million in core capital),  or 20.0% of risk-weighted  assets of
$52.1 million. This amount was $6.2 million above the 8.0% requirement in effect
on that date.

Year 2000 Issue

         The approach of the year 2000 presents potential problems to businesses
that utilize computers in their daily operations.  Some computer systems may not
be able to properly  interpret  dates after December 31, 1999,  because they use
only two digits to indicate the year in the date.  Therefore,  a date using "00"
as the year may be  recognized  as the year 1900 rather than the year 2000.  See
"Forward-Looking Statements".
<PAGE>

         Financial  institution  regulators  recently have increased their focus
upon year  2000  compliance  issues  and have  issued  guidance  concerning  the
responsibilities  of senior  management  and  directors.  The Federal  Financial
Institutions  Examination Council has issued several  interagency  statements on
Year 2000 Project  Management  Awareness.  These  statements  require  financial
institutions  to,  among  other  things,  examine  the year 2000  issue on their
customers, suppliers and borrowers. These statements also require each federally
insured regulated financial institution to survey its exposure, measure its risk
and  prepare a plan to address  the year 2000 issue.  In  addition,  the federal
banking regulators have issued safety and soundness guidelines to be followed by
insured depository  institutions,  such as the Bank, to assure resolution of any
year 2000 problems.  The federal  banking  agencies have asserted that year 2000
testing and  certification  is a key safety and soundness  issue in  conjunction
with  regulatory  exams  and,  thus,  that an  institution's  failure to address
appropriately the year 2000 issue could result in supervisory action,  including
the  reduction  of  the  institution's   supervisory   ratings,  the  denial  of
applications for approval of mergers or acquisitions, or the imposition of civil
money penalties.

         The  Company  has formed a Year 2000  Committee  (the  "Committee")  to
address the potential problems associated with the Year 2000 computer issue. The
Committee, consisting of directors, officers and employees of the Company, meets
on a regular  basis  and  provides  regular  reports  to the Board of  Directors
detailing progress with the Year 2000 issue.

         The Company's primary computer processing is provided by a data center,
and through this data center the Company  migrated to a new Year 2000  compliant
teller/bank  operation  platform in November  1998. To ensure that  readiness of
this  system,  the Company  will perform  testing of actual  customer  data on a
separate  system in March 1999. As of December 31, 1998,  all in-house  computer
systems have been  inspected  and their risk of a Year 2000 failure  identified.
Also, all company software is being evaluated  through vendor ensured  readiness
statements  and  testing  by  the  Committee.  The  Company  does  not  use  any
custom-programmed  software. Another area under review are systems which utilize
embedded  microchips  (such  as in  heating,  ventilation  and air  conditioning
systems,  security and other  related  systems).  Venders for these systems have
been contacted and have indicated Year 2000 risks to be minimal.

         With an issue  as  complex  as the  Year  2000,  the  Company  believes
education of employees,  customers  and  community  members is vital to a better
understanding  of what real  dangers  are posed by the arrival of the Year 2000.
Education has been provided through in-house  training  sessions,  literature to
customers, as well as seminars offered to the community.  Additional information
has been provided  through the  Company's  internet site in the form of links to
various Year 2000 information sites.

         Costs to the Company related to the Year 2000 issue are estimated to be
between $50,000 and $60,000.  To date the following Year 2000 expenses have been
identified at approximately $40,000 for testing of the data center equipment and
programs,  $3,000 for  equipment  upgrades and $2,000 for employee and community
education.  It is impossible to predict the exact expenses  associated  with the
Year 2000 issue and additional  funds may be needed for unknown expenses related
to Year 2000 testing,  training,  and education,  as well as system and software
replacements.

         As with any  organization  that  depends  on  technology,  particularly
computer  systems and software,  a Year 2000 related failure poses a significant
threat to continued business  operations.  While the Company is doing everything
in its power to ensure Year 2000 readiness, we recognize that the success of our
third party  providers  is vital to our  success.  Of primary  concern are local
utility and telecommunication companies. These, in addition to our third parties
such as our data center,  electronic  banking  service  providers  and financial
partners, have been contacted and we are monitoring their progress towards their
own Year 2000  readiness.  Another  potential risk to the  Corporation  includes
lending and deposit  relationships.  The Committee is currently evaluating these
two groups and  assessing  any  potential  risks,  as well as  establishing  any
necessary corrective  procedures.  There can be no assurance that the systems of
these  third  parties  will be  converted  on a timely  basis,  which could have
material  adverse  affect on our business,  financial  condiation and results of
operations.

         The Committee is currently in the process of establishing a contingency
plan to address  potential Year 2000 problems.  Despite  careful  planing by the
Corporation, we recognize there may be circumstances beyond our control that may
prohibit us from operating "as usual" after December 31, 1999.



<PAGE>



                           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

                  The Annual  Shareholders'  Meeting of MSB Financial,  Inc. was
                  held on  December  8,  1998  in  Marshall,  Michigan.  At that
                  meeting  the  shareholders  elected the  following  persons to
                  three year terms to the Board of Directors.  Aart VanElst by a
                  vote of 973,889 for and 66,084  against.  John W. Yakimow by a
                  vote of 986,209 for and 53,764 against.  Shareholders ratified
                  the Reincorporation  Proposal of change the Company's state of
                  incorporation  from  Delaware to Maryland by a vote of 808,772
                  for, 61,863 against,  4,576 abstentions and 164,662 non-votes.
                  Also  approved  was  the  appointment  of  Crowe,  Chizek  and
                  Company,  L.L.P., as independent  auditors for the Company for
                  the fiscal year ending June 30,  1999,  with a vote of 985,424
                  for, 50,028 against and 4,521 abstentions.

Item 5.           Other Information

                  None.

Item 6.           Exhibits and Reports on Form 8-K

                  (a) Exhibits

                           See Exhibit Index.

                  (b) Reports on Form 8-K

                           None.



<PAGE>

                                   SIGNATURES

         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.
                                                              

                                        MSB Financial, Inc.
                                        Registrant


Date: February 12, 1999                 \s\Charles B. Cook
                                        ----------------------------------------
                                        Charles B. Cook,  President and Chief
                                        Executive Officer  (Duly Authorized
                                        Officer)

Date: February 12, 1999                 \s\Elaine R. Carbary
                                        ----------------------------------------
                                        Elaine R. Carbary, Chief Financial
                                        Officer (Principal Financial Officer)

<PAGE>


                               MSB FINANCIAL, INC.

                                  EXHIBIT INDEX

Exhibit No.       Description

3                 Registrant's  Articles of Incorporation  and Bylaws,  filed on
                  February 4, 1999 as exhibits to the Registrant's  Registration
                  Statement on Form S-8 (File No.  333-71837),  are incorporated
                  here in by reference.

4                 Registrant's Specimen Stock Certificate,  filed on February 4,
                  1999 as Exhibit 4 to the Registrant's  Registration  Statement
                  on Form S-8 (File No.  333-71837),  is incorporated  herein by
                  reference.

10.1              Employment  Agreement  between  the Bank and  Charles B. Cook,
                  filed on September  23, 1995 as Exhibit  10.2 to  Registrant's
                  Registration  Statement  on Form S-1 (File No.  33-81312),  is
                  incorporated herein by reference.

10.2              Registrant's  1995 Stock Option and Incentive  Plan,  filed as
                  Exhibit  10(b) to  Registrant's  Report on Form 10-KSB for the
                  fiscal  year  ended  June 30,  1995  (File  No.  0-24898),  is
                  incorporated herein by reference.

10.3              Registrant's  Recognition and Retention Plan, filed as Exhibit
                  10(c) to  Registrant's  Report on Form  10-KSB  for the fiscal
                  year ended June 30, 1995 (File No.  0-24898),  is incorporated
                  herein by reference.

11                Statement re: computation of per earnings  per share (see Note
                  1 of the Notes to Consolidated  Financial Statements contained
                  in this Form 10-QSB).

27                Financial Data Schedule (electronic filing only).