UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.  20549

                                 FORM 10-QSB

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

                     For the quarter ended June 30, 1999

                                     OR

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

          For the transition period from ___________ To ___________

                       Commission file number 0-25047

                              RFS BANCORP, INC.
           (Exact name of registrant as specified in its charter)

          UNITED STATES                                      04-3449818
---------------------------------                        -------------------
  (State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                        Identification No.)

              310 BROADWAY
         REVERE, MASSACHUSETTS                                  02151
----------------------------------------                      ----------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code         (781) 284-7777
                                                           --------------

Indicate by check mark 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 June 30, 1999, 933,523 shares of the registrant's common stock were
outstanding.


                      RFS BANCORP, INC. and SUBSIDIARY

                                    INDEX

PART I    FINANCIAL INFORMATION                                     Page
          ---------------------                                     ----

Item 1    Consolidated Financial Statements:

          Consolidated Balance Sheets - June 30, 1999
           and September 30, 1998                                     1

          Consolidated Statements of Income - Three Months
           Ended June 30, 1999 and 1998                               2

          Consolidated Statements of Income - Nine Months
           Ended June 30, 1999 and 1998                               3

          Consolidated Statements of Changes in Stockholders'
           Equity-Nine Months Ended June 30, 1999 and 1998            4

          Consolidated Statements of Cash Flows - Nine Months
           Ended June 30, 1999 and 1998                               5

          Notes to Unaudited Consolidated Financial Statements -
           June 30, 1999                                              6

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


PART II   OTHER INFORMATION
          -----------------

Item 4    Submission of Matters to Vote of Security holders          28

Item 6    Exhibits and Reports on Form 8-K                           28


          SIGNATURES                                                 29
          ----------


                      RFS BANCORP, INC. and SUBSIDIARY
                         CONSOLIDATED BALANCE SHEETS
                           (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                     June 30, 1999    September 30, 1998
                                                     -------------    ------------------
                                                                 (Unaudited)

<S>                                                    <C>                  <C>
ASSETS
------
  Cash and due from banks                              $  2,003             $ 1,195
  Federal funds sold                                      2,117               6,735
                                                       ----------------------------
      Total cash and cash equivalents                     4,120               7,930
  Securities available for sale, at fair value            5,808                 896
  Securities held to maturity, at amortized cost         27,262              30,110
  Federal Home Loan Bank stock, at cost                   1,517               1,517
  Loans, net of allowance for loan losses of
   $593 and $528, respectively                           65,070              46,852
  Bank premises and equipment, net                        1,887               1,252
  Accrued interest receivable                               645                 519
  Other assets                                              328                 392
                                                       ----------------------------

      Total assets                                     $106,637             $89,468
                                                       ============================

LIABILITIES and STOCKHOLDERS' EQUITY
------------------------------------
  Deposits                                             $ 72,590             $64,327
  Federal Home Loan Bank borrowings                      23,334              18,204
  Mortgagors' escrow accounts                               247                 157
  Accrued expenses and other liabilities                    350                 296
                                                       ----------------------------
      Total liabilities                                  96,521              82,984
                                                       ----------------------------

  Stockholders' equity:
    Common stock $.01 par value, 5,000,000 shares
     authorized, 933,523 shares issued                        9                  --
    Additional paid-in capital                            3,698                  --
    Retained earnings                                     6,245               5,971
    Accumulated other comprehensive income                  515                 513
    Unallocated ESOP shares                                (351)                 --
                                                       ----------------------------

      Total stockholders' equity                         10,116               6,484
                                                       ----------------------------

      Total liabilities and stockholders' equity       $106,637             $89,468
                                                       ============================

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                           Three Months Ended
                                                     ------------------------------
                                                     June 30, 1999    June 30, 1998
                                                     -------------    -------------
                                                               (Unaudited)

<S>                                                      <C>              <C>
Interest and dividend income:
  Interest and fees on loans                             $1,262           $  976
  Interest and dividends on securities                      486              596
  Other interest                                             32               71
                                                         -----------------------
      Total interest and dividend income                  1,780            1,643
                                                         -----------------------

Interest expense:
  Deposits                                                  601              568
  Federal Home Loan Bank borrowings                         276              323
                                                         -----------------------
      Total interest expense                                877              891
                                                         -----------------------

Net interest and dividend income                            903              752

Provision for loan losses                                    27               51
                                                         -----------------------

Net interest and dividend income, after provision
 for loan losses                                            876              701
                                                         -----------------------

Other income:
  Loan servicing fees                                        14               17
  Deposit account fees                                       45               38
  Gain (loss) on sales of mortgage loans, net                36               (9)
  Other income                                               36               28
                                                         -----------------------
      Total other income                                    131               74
                                                         -----------------------

Operating expenses:
  Salaries and employees benefits                           456              326
  Occupancy and equipment expenses                          125               85
  Professional services                                      92               80
  Data processing expenses                                   54               42
  Other expenses                                            109              107
                                                         -----------------------
      Total operating expenses                              836              640
                                                         -----------------------

Income before income taxes                                  171              135

Provision for income taxes                                   55               50
                                                         -----------------------

Net income                                               $  116           $   85
                                                         =======================

Earnings per share (annualized)                          $ 0.50              N/A

Weighted average shares outstanding                         934              N/A

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                           Nine Months Ended
                                                     ------------------------------
                                                     June 30, 1999    June 30, 1998
                                                     -------------    -------------
                                                               (Unaudited)

<S>                                                      <C>              <C>

Interest and dividend income:
  Interest and fees on loans                             $3,444           $2,830
  Interest and dividends on securities                    1,507            1,827
  Other interest                                            138              234
                                                         -----------------------
      Total interest and dividend income                  5,089            4,891
                                                         -----------------------

Interest expense:
  Deposits                                                1,816            1,693
  Federal Home Loan Bank borrowings                         770            1,055
                                                         -----------------------
      Total interest expense                              2,586            2,748
                                                         -----------------------

Net interest and dividend income                          2,503            2,143

Provision for loan losses                                    72              174
                                                         -----------------------

Net interest and dividend income, after provision
 for loan losses                                          2,431            1,969
                                                         -----------------------

Other income:
  Loan servicing fees                                        60               57
  Deposit account fees                                      127              103
  Gain (loss) on sales of mortgage loans, net                37              (13)
  Other income                                              118               83
                                                         -----------------------
      Total other income                                    342              230
                                                         -----------------------

Operating expenses:
  Salaries and employees benefits                         1,209              941
  Occupancy and equipment expenses                          367              261
  Professional services                                     252              245
  Data processing expenses                                  158              112
  Other expenses                                            367              307
                                                         -----------------------
      Total operating expenses                            2,353            1,866
                                                         -----------------------

Income before income taxes                                  420              333

Provision for income taxes                                  146              125
                                                         -----------------------

Net income                                               $  274           $  208
                                                         =======================

Earnings per share (annualized)                          $ 0.39              N/A

Weighted average shares outstanding                         934              N/A

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  NINE MONTHS ENDED JUNE 30, 1999 AND 1998
                               (In Thousands)
                                 (unaudited)

<TABLE>
<CAPTION>

                                                                        Accumulated
                                             Additional                    Other                                Total
                                   Common     Paid-in      Retained    Comprehensive    Unallocated ESOP    Stockholders'
                                    Stock     Capital      Earnings        Income            Shares             Equity
                                   --------------------------------------------------------------------------------------

<S>                                <C>         <C>          <C>            <C>               <C>               <C>
Balance at September 30, 1998      $ --        $   --       $5,971         $513              $  --             $ 6,484

Comprehensive income:
  Net income                         --            --          274           --                 --                  --
  Change in unrealized holding
   gain on securities available
   for sale, net of taxes            --            --           --            2                 --                  --
    Comprehensive income                                                                                           276

Net proceeds from common
 stock issued pursuant to IPO         9         3,698           --           --                 --               3,707
Unallocated ESOP shares                                                                       (351)               (351)
                                   -----------------------------------------------------------------------------------
Balance at June 30, 1999           $  9        $3,698       $6,245         $515              $(351)            $10,116
                                   ===================================================================================

Balance at September 30, 1997      $ --        $   --       $5,681         $358              $  --             $ 6,039
Comprehensive income:
  Net income                         --            --          208           --                 --                  --
  Change in unrealized holding
   gain on securities available
   for sale, net of taxes            --            --           --          121                 --                  --
  Comprehensive income                                                                                             329
                                   -----------------------------------------------------------------------------------
Balance at June 30, 1998           $ --        $   --       $5,889         $479              $  --             $ 6,368
                                   ===================================================================================

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
                    Consolidated Statements of Cash Flows
                               (In Thousands)

<TABLE>
<CAPTION>

                                                        Nine Months      Nine Months
                                                          Ended            Ended
                                                       June 30, 1999    June 30, 1998
                                                       -------------------------------
                                                                 (unaudited)

<S>                                                       <C>              <C>
Cash flows from operating activities:

Net income                                                $    274         $    208
Adjustments to reconcile net income to net cash
 provided by operating activities:

Provision for loan losses                                       72              174
(Gain) loss on sale of mortgage loans                            7               13
Amortization, net of accretion, of securities                   55               26
Depreciation                                                   164              113
(Increase) decrease in interest receivable                    (126)              62
(Increase) decrease  in other assets                            64             (229)
Increase (decrease) in accrued expenses
 and other liabilities                                          41             (164)
Change in deferred loan origination fees, net                   13               (2)
                                                          -------------------------

Net cash provided by operating activities                      564              201
                                                          -------------------------

Cash flows from investing activities:
  Purchase of Federal Home Loan Bank Stock                      --             (112)
  Purchases of held-to-maturity securities                  (4,021)          (5,500)
  Purchase of available-for-sale securities                 (4,908)               0
  Proceeds from maturities, h-t-m securities                 6,825           12,331
  Net increase in loans, net                               (23,417)         (11,772)
  Proceeds from sale of loans                                5,107            5,948
  Purchases of banking premises and equipment                 (799)            (133)
                                                          -------------------------

Net cash provided by (used in) investing activities        (21,213)             762
                                                          -------------------------

Cash flows from financing activities:
  Net increase in deposits                                   8,263            7,520
  Proceeds from FHLB advances                                6,000           12,500
  Repayment of advances from FHLB                             (870)         (18,320)
  Net increase in mortgagors' escrow accounts                   90                2
  Net proceeds from common stock issued
   pursuant to initial public offering                       3,707               --
  Payments to acquire common stock for ESOP                   (351)              --
                                                          -------------------------

Net cash provided by financing activities                   16,839            1,702
                                                          -------------------------

Net change in cash and cash equivalents                     (3,810)           2,665

Cash and cash equivalents at beginning of period             7,930            1,832
                                                          -------------------------

Cash and cash equivalents at end of period                $  4,120         $  4,497
                                                          =========================

Supplemental cash flow information:
  Interest paid on deposits                               $  1,814         $  1,695
  Interest paid on FHLB borrowings                        $    770         $  1,055
  Income taxes paid                                       $    157         $    324

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
                       Part I - Financial Information
                       Item 1 - Financial Statements
            Notes to Unaudited Consolidated Financial Statements
                                June 30, 1999

1)  Basis of Presentation and Consolidation

The unaudited consolidated interim financial statements of RFS Bancorp, Inc.
and Subsidiaries ("RFS Bancorp" or the "Company") presented herein should be
read in conjunction with the consolidated financial statements for the year
ended September 30, 1998, included in the Annual Report on Form 10-KSB of
RFS Bancorp, Inc., the holding company for Revere Federal Savings Bank (the
"Bank").  The operating results for the period ended June 30, 1999 are those
of the Company and Bank. The Company had not issued any stock and had not
conducted any business until December 18, 1998 when RFS Bancorp became the
Bank's holding company in connection with the Bank's reorganization from the
mutual savings association to a Federal mutual holding company structure.
Operating results prior to December 18, 1998 include only the Bank and not
the Company.

The unaudited consolidated interim financial statements herein have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for completed financial statements.

In the opinion of management, the consolidated financial statements reflect
all adjustments (consisting solely of normal recurring accruals) necessary
for a fair presentation of such information.  Interim results are not
necessarily indicative of results to be expected for the entire year.

2)  Commitments and Contingencies

At June 30, 1999, the Bank had outstanding commitments to originate loans
amounting to approximately $5.1 million, unused construction advances
amounting to approximately $1.4 million and unused lines of credit amounting
to approximately $1.1 million for commercial loans and $3.1 million for home
equity loans.

3)  Stock Conversion

The Bank is a federally chartered stock savings bank founded in 1901.  The
Bank converted from a federal mutual savings association into a mutual
holding company form of organization on December 18, 1998 and issued 100% of
its capital stock to the Company.  RFS Bancorp has been organized at the
direction of the Board of Directors of the Bank.  The Company issued 933,523
shares of which 47% of these shares, or 438,756 shares, were sold to the
Bank's depositors and employee benefit plans and 53% of these shares, or
494,767 shares, were issued to Revere, MHC, a federal mutual holding company
(the "MHC").   Net proceeds of the offering were approximately $3.8 million.
On December 18, 1998, the Company loaned approximately $351,000 to the
Company's Employee Stock Ownership Plan to fund its purchase of 35,100
shares of common stock of the Company.

4)  Earnings Per Share

Earnings per share for the three months ended June 30, 1999 (annualized) was
$.50.  Earnings per share for the nine months ended June 30, 1999
(annualized) was $.39.  Earnings per share data is not presented for the
three and nine months ended June 30, 1998 since there were no outstanding
shares of common stock until the reorganization on December 18, 1998.

5)  Recent Accounting Pronouncement

On June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
effective for fiscal years beginning after December 15, 1997.  Accounting
principles generally require that recognized revenue, expenses, gains and
losses be included in net income.  Certain FASB statements, however, require
entities to report specific changes in assets and liabilities, such as
unrealized gains and losses on available-for-sale securities, as a separate
component of the equity section of the consolidated balance sheet.  Such
items, along with net income, are components of comprehensive income.  SFAS
No. 130 requires that all items of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.  Additionally, SFAS No. 130 requires that the
accumulated balance of other comprehensive income be displayed separately
from retained earnings and additional paid-in capital in the equity section
of the consolidated balance sheet.  The Company adopted these disclosure
requirements in the quarter ending December 31, 1998.

6)  Investment Securities

Debt and equity securities have been classified in the consolidated balance
sheets according to management's intent.  The carrying amount of securities
and their approximate fair values are as follows:

<TABLE>
<CAPTION>

                                      June 30, 1999        September 30, 1998
                                  --------------------    --------------------
                                  Amortized     Fair      Amortized     Fair
                                     Cost       Value         Cost      Value
                                  --------------------------------------------
                                                 (In Thousands)

<S>                                <C>         <C>         <C>         <C>
Securities Available for Sale:
  Mortgage-backed securities       $ 4,896     $ 4,761     $     0     $     0
  Marketable equity securities          24       1,047          24         896
      Total                        $ 4,920     $ 5,808     $    24     $   896

Securities held to maturity:
  U.S. Government & Federal
   Agency Obligations              $ 4,000     $ 3,808     $ 5,000     $ 5,031
  Mortgage-backed securities        19,807      19,607      20,164      20,640
  Asset-backed securities            3,455       3,417       4,946       4,976
      Total                        $27,262     $26,832     $30,110     $30,647

</TABLE>

7)  Loans

The following table presents selected data relating to the composition of
the Company's loan portfolio by type of loan on the dates indicated.

<TABLE>
<CAPTION>

                                       June 30, 1999      September 30, 1998
                                    ------------------    ------------------
                                    Amount     Percent    Amount     Percent
                                    ----------------------------------------
                                             (DOLLARS IN THOUSANDS)

<S>                                 <C>        <C>        <C>        <C>
Resident mortgage loans             $42,923     65.3%     $34,475     73.0%
Commercial real estate loans          9,104     13.8        3,969      8.4
Construction and land loans           3,042      4.6        1,885      4.0
Commercial loans                      6,181      9.4        2,724      5.8
Consumer loans                        1,155      1.8        1,091      2.3
Home equity loans                     3,331      5.1        3,061      6.5
                                    -------               -------
      Total loans                    65,736    100.0%      47,205    100.0%

Loans held for sale                       0                   235
Less :
  Deferred loan origination fees         73                    60
  Allowance for loan losses             593                   528
                                    -------               -------
      Total Loans, net              $65,070               $46,852
                                    =======               =======

</TABLE>

8)  Allowance for Loan Losses

The following table analyzes activity in the Company's allowance for loan
losses for the periods indicated.

<TABLE>
<CAPTION>

                                                              Nine             Nine
                                                         Months Ended     Months Ended
                                                         June 30, 1999    June 30, 1998
                                                         -------------    -------------
                                                             (Dollars in Thousands)

<S>                                                         <C>              <C>
Average loans, net                                          $55,790          $44,477
                                                            ========================
Period-end gross loans                                      $65,736          $47,391
                                                            ========================

Allowance for loan losses at beginning of period            $   528          $   377
Provision for loan losses                                        72              174
Plus recoveries                                                   2               --
Loans charged-off                                                 9               45
                                                            ------------------------
Allowance for loan losses at end of period                  $   593          $   506
                                                            ========================

Non-performing loans                                        $   173          $   144
                                                            ========================
Ratios:
  Allowance for loan losses to period-end gross loans           .90%            1.07%
  Allowance for loan losses to non-performing loans           342.8%           351.4%

</TABLE>

9)  Deposits and Borrowed Funds

The following tables set forth the various types of deposit accounts at the
Company and the balances in these accounts as well as the borrowings of the
Company at the dates indicated.

<TABLE>
<CAPTION>

                                 June 30, 1999      September 30, 1998
                              ------------------    ------------------
                              Amount     Percent    Amount     Percent
                              ----------------------------------------
                                       (DOLLARS IN THOUSANDS)

<S>                           <C>        <C>        <C>        <C>
Deposits:
  Savings accounts            $16,760     23.1%     $16,668     25.9%
  NOW checking                  6,955      9.6        5,345      8.3
  Demand deposits               5,618      7.7        2,823      4.4
  Money market accounts         2,459      3.4        1,883      2.9
  Certificates of deposit      40,798     56.2       37,608     58.5
                              -------               -------

      Total deposits          $72,590    100.0%     $64,327    100.0%
                              =======               =======

Borrowed funds:
  Advances from FHLB          $23,334               $18,204
  Other borrowed funds             --                    --
                              -------               -------

      Total borrowed funds    $23,334               $18,204
                              =======               =======

</TABLE>


                      RFS BANCORP, INC. and SUBSIDIARY
                       Part I - Financial Information
     Item 2 - Management's Discussion and Analysis of Financial Condition
                          and Results of Operations
                                June 30, 1999

General

      Revere Federal Savings Bank (the "Bank") completed its conversion from
a federal mutual savings association to a stock institution and was
simultaneously acquired by RFS Bancorp, Inc. (the "Company") on December 18,
1998 upon the consummation of the Bank's reorganization to the mutual
holding company form of organization and stock offering (the
"Reorganization").  The following discussion and analysis should be read in
conjunction with the consolidated financial statements and related notes
thereto included within this report.  This analysis provides an overview of
the significant changes that occurred during the period presented.

      The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements.  When used in this
discussion, the words "believes", "anticipates", "contemplates", "expects",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected.  Those risks
and uncertainties include changes in interest rates generally and changes in
real estate values and other economic conditions in eastern Massachusetts,
the Bank's principal market area.  The Company undertakes no obligation to
publicly release the results of any revisions to those forward-looking
statements which may be made to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
Additional information on potential factors which could affect the Company's
financial results are included in the Annual Report on Form 10-KSB of RFS
Bancorp.

      The Company's operating results are primarily dependent upon net
interest and dividend income. Net interest income is the difference between
income earned on the Company's loan and investment portfolio and the
Company's funds which consists of interest paid on deposits and borrowings.
Operating results are also affected by the provision for loan losses,
securities sales activities and service charges on deposit accounts as well
as other fees.  The Company's operating expenses consist of salaries and
employee benefits, occupancy and equipment expenses, professional fees as
well as marketing and other expenses.  Results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in interest rates and government and regulatory
policies.

Market Risk Analysis

      Qualitative Disclosures About Market Risk. Like other institutions,
the Company's most significant form of market risk is interest rate risk.
The Company is subject to interest rate risk to the degree that the
Company's interest-bearing liabilities, primarily deposits with short and
medium-term maturities, mature or reprice at different rates than the
Company's interest-earning assets.  The Company believes it is critical to
manage the relationship between interest rates and the effect on the
Company's net portfolio value ("NPV").  This approach calculates the
difference between the present value of expected cash flows from assets and
the present value of expected cash flows from liabilities, as well as cash
flows from off-balance sheet contracts.  The Company manages assets and
liabilities within the context of the marketplace, regulatory limitations
and within limits established by the Company's Board of Directors on the
amount of change in NPV which is acceptable given certain interest rate
changes.

      An asset or liability is interest rate sensitive within a specific
time period if it will mature or reprice within that time period.  If the
Company's assets mature or reprice more quickly or to a greater extent than
the Company's liabilities, the Company's net portfolio value and net
interest income would tend to increase during periods of rising interest
rates but decrease during periods of falling interest rates.  Conversely, if
the Company's assets mature or reprice more slowly or to a lesser extent
than the Company's liabilities, the Company's net portfolio value and net
interest income would tend to decrease during periods of rising interest
rates but increase during periods of falling interest rates.  The Company's
policy has been to mitigate the interest rate risk inherent in the
historical savings institution business of originating long-term loans
funded by short-term deposits by pursuing certain strategies designed to
decrease the vulnerability of the Company's earnings to material and
prolonged changes in interest rates.  In this regard, the Company's attempts
to minimize interest rate risk by, among other things, emphasizing the
origination and retention of adjustable-rate loans and loans with shorter
maturities and the sale of long-term one-to-four family fixed-rate loans in
the secondary market.

Average Balances, Interest, Yields and Rates

      The following tables set forth certain information relating to the
Company's average balance sheet and reflect the interest earned on assets
and interest cost of liabilities for the periods indicated and the average
yields earned and rates paid for the periods indicated.  Such yields and
costs are derived by dividing income or expense by the average monthly
balances of assets and liabilities, respectively, for the periods presented.
Average balances are derived from daily balances.  Loans on nonaccrual
status are included in the average balances of loans shown in the tables.
The investment securities in the following tables are presented at amortized
cost.

<TABLE>
<CAPTION>

                                              Three Months Ended June 30, 1999    Three Months Ended June 30, 1998
                                              --------------------------------    --------------------------------
                                                           Interest                            Interest
                                              Average      Income/     Yield/     Average      Income/     Yield/
                                              Balance      Expense     Rate       Balance      Expense     Rate
                                              --------------------------------------------------------------------
                                                                     (Dollars in Thousands)

<S>                                           <C>          <C>         <C>        <C>          <C>         <C>
INTEREST-EARNING ASSETS:

Total loans, net                              $ 60,918     $1,262        8.29%    $45,499      $  976        8.58%
Investments                                     29,710        486        6.54%     33,899         596        7.03%
Other earning assets                             2,866         32        4.47%      5,593          71        5.08%
                                              -------------------                 -------------------

Total interest-earning assets                   93,494      1,780        7.62%     84,991       1,643        7.73%
                                                           ------                              ------

Cash and due from banks                          1,133                                589
Other assets                                     6,409                              4,162
                                              --------                            -------

Total assets                                  $101,036                            $89,742
                                              ========                            =======

INTEREST-BEARING LIABILITIES:

Passbook & Statement Savings                  $ 16,703         54        1.29%    $15,608          52        1.33%
NOW's and MMA's                                  9,126         32        1.40%      6,462          27        1.67%
Certificate of deposits                         40,143        515        5.12%     35,836         489        5.46%
                                              -------------------                 -------------------

Total interest-bearing deposits                 65,972        601        3.64%     57,906         568        3.92%

FHLB borrowings                                 20,021        276        5.51%     22,746         323        5.68%
                                              -------------------                 -------------------

Total interest-bearing liabilities              85,993        877        4.07%     80,652         891        4.42%
                                                           ------                              ------
Demand deposit accounts                          4,822                              2,499
Other liabilities                                  693                                324
                                              --------                            -------

Total liabilities                               91,508                             83,475

Stockholders' equity                             9,528                              6,267
                                              --------                            -------

Total liabilities and stockholders' equity    $101,036                            $89,742
                                              ========                            =======

Net interest income                                        $  904                              $  752
                                                           ======                              ======

Interest rate spread                                                     3.55%                               3.31%

Net interest margin                                                      3.87%                               3.54%

Interest-earning assets/interest-bearing
 liabilities                                                           108.72%                             105.38%

<CAPTION>

                                              Nine Months Ended June 30, 1999     Nine Months Ended June 30, 1998
                                              -------------------------------     -------------------------------
                                                           Interest                            Interest
                                              Average      Income/     Yield      Average      Income/     Yield
                                              Balance      Expense     Rate       Balance      Expense     Rate
                                              -------------------------------------------------------------------
                                                                     (Dollars in Thousands)

<S>                                           <C>          <C>         <C>        <C>          <C>        <C>
INTEREST-EARNING ASSETS:
Total loans, net                              $55,790      $3,444        8.23%    $44,477      $2,830       8.48%
Investments                                    30,191       1,507        6.66%     34,964       1,827       6.97%
Other earning assets                            4,079         138        4.51%      5,841         234       5.34%
                                              -------------------                 -------------------

Total interest-earning assets                  90,060       5,089        7.53%     85,282       4,891       7.65%
                                                           ------                              ------

Cash and due from banks                           924                                 546
Other assets                                    5,537                               3,486
                                              -------                             -------

Total assets                                  $96,521                             $89,314
                                              =======                             =======

INTEREST-BEARING LIABILITIES:

Passbook & Statement Savings                  $16,702         174        1.39%    $14,892         142       1.27%
NOW's and MMA's                                 8,438          90        1.42%      5,745          69       1.60%
Certificate of deposits                        39,059       1,552        5.30%     35,203       1,482       5.61%
                                              -------------------                 -------------------

Total interest-bearing deposits                64,199       1,816        3.77%     55,840       1,693       4.04%
FHLB borrowings                                18,645         770        5.51%     24,343       1,055       5.78%
                                              -------------------                 -------------------

Total interest-bearing liabilities             82,844       2,586        4.16%     80,183       2,748       4.57%
                                                           ------                              ------

Demand deposit accounts                         4,336                               2,440
Other liabilities                                 495                                 363
                                              -------                             -------

Total liabilities                              87,675                              82,986

Stockholders' equity                            8,846                               6,328
                                              -------                             -------

Total liabilities and stockholders' equity    $96,521                             $89,314
                                              =======                             =======

Net interest income                                        $2,503                              $2,143
                                                           ======                              ======

Interest rate spread                                                     3.37%                              3.08%

Net interest margin                                                      3.71%                              3.35%

Interest-earning assets/interest-bearing liabilities                   108.71%                            106.36%

</TABLE>

Rate/Volume Analysis

      The following tables set forth certain information regarding changes
in interest income and interest expense of the Company for the periods
indicated.  For each category of interest-earning asset and interest-bearing
liability, information is provided on changes attributable to: (i) changes
in volume (changes in volume multiplied by old rate); (ii) changes in rates
(change in rate multiplied by old volume).  Changes in rate-volume (changes
in rate multiplied by the changes in volume) are allocated between changes
in rate and changes in volume.

<TABLE>
<CAPTION>

                                 Three Months Ended June 30,
                                        1999 vs. 1998
                                     Increase (decrease)
                                 ---------------------------
                                      Due to
                                 ----------------
                                 Rate      Volume     Total
                                 ---------------------------
                                       (In Thousands)

<S>                              <C>       <C>        <C>
Interest and dividend income:
  Loans, net                     $(39)     $ 325      $ 286
  Investments                     (39)       (71)      (110)
  Other earning assets             (6)       (33)       (39)
                                 --------------------------
    Total                         (84)       221        137
                                 --------------------------

Interest expense:
  Deposits                        (43)        76         33
  Borrowed funds                   (8)       (39)       (47)
                                 --------------------------
    Total                         (51)        37        (14)
                                 --------------------------

Change in net interest income    $(33)     $ 184      $ 151
                                 ==========================

<CAPTION>

                                 Nine Months Ended June 30,
                                        1999 vs. 1998
                                     Increase (decrease)
                                 ---------------------------
                                      Due to
                                 ----------------
                                 Rate      Volume     Total
                                 --------------------------
                                       (In Thousands)

<S>                              <C>       <C>        <C>
Interest and dividend income:
  Loans, net                     $ (95)     $ 709      $ 614
  Investments                      (76)      (244)      (320)
  Other earning assets             (31)       (65)       (96)
    Total                         (202)       400        198

Interest expense:
  Deposits                        (122)       245        123
  Borrowed funds                   (44)      (241)      (285)
    Total                         (166)         4       (162)

Change in net interest income    $ (36)     $ 396      $ 360

</TABLE>

Financial Condition and Results of Operations

Comparison of Financial Condition at June 30, 1999 and September 30, 1998.
      The Company's total assets increased by $17.2 million or 19.2% to
$106.6 million at June 30, 1999 from $89.5 million at September 30, 1998.
The net increase in total assets is primarily attributable to a $18.2
million increase in net loans, offset by a $3.8 million decrease in cash and
cash equivalents.  Total net loans increased by $18.2 million or 38.9% to
$65.1 million or 61.0% of total assets at June 30, 1999 as compared to $46.9
million or 52.4% of total assets at September 30, 1998. This increase
resulted from the receipt of $3.8 million in net proceeds from the issuing
of stock, the Company's continued emphasis on small business lending and a
favorable interest rate environment.  Investment securities held by the
Company increased by $2.1 million or 6.7% to $33.1 million at June 30, 1999
from $31.0 million at September 30, 1998.  This increase is due primarily to
the purchase of $5.0 million in  mortgaged-backed securities and the
scheduled  principal paydowns of mortgaged-backed and asset-backed
securities.

      Total deposits increased by $8.3 million or 12.9% to $72.6 million at
June 30, 1999 from $64.3 million at September 30, 1998.  This increase was
the result of the opening of the Chelsea branch and ordinary deposit growth.
Total Federal Home Loan Bank of Boston ("FHLB") advances increased by $5.1
million or 28.2% to $23.3 million at June 30, 1999 from $18.2 million at
September 30, 1998.  Total equity increased by $3.6 million or 56.0% to
$10.1 million at June 30, 1999 from $6.5 million at September 30, 1998 as a
result of $3.8 million raised from the sale of stock, an increase of $2,000
in the net unrealized gain on securities and net income of $274,000.

Comparison of the Operating Results for the
 Three Months ended June 30, 1999 and 1998.

Net Income. The Company's net income for the three months ended June 30,
1999 was $116,000 as compared to $85,000 for the three months ended June 30,
1998.  This $31,000 or 36.5% increase in net income during the period was
the result of an increase of $137,000 in interest and dividend income, an
increase of $57,000 in other income, a decrease of $14,000 in interest
expense and a decrease in provision for loan losses of $24,000, partially
offset by an increase of $196,000 in operating expenses and an increase in
provisions for income taxes of $5,000.  The increase in other income was
primarily the result of increased fees on transactional deposit accounts and
serviced loans and the adoption of FASB 125 - Capitalization of Mortgage
Servicing Rights.  This adoption resulted in a one-time adjustment of
$41,000.  The Company's continued expansion of its lending activities
accounted for the increase in interest and dividend income, while its
operating expenses increased due to the Company's planned expenditures in
human and technological resources, including increased staffing and non-
recurring start-up expenses associated with the Bank's new branch office in
Chelsea, Massachusetts.  The return on average assets for the three months
ended June 30, 1999 was .46% compared to .38% for the three months ended
June 30, 1998.

Net Interest and Dividend Income.  The Company's net interest and dividend
income for the three months ended June 30, 1999 increased $151,000 or 20.1%
to $903,000 from $752,000 for the three months ended June 30, 1998.  The
increase can be attributed to a combination of the $137,000 increase in
interest and dividend income and a $14,000 decrease in interest expense on
deposits and borrowed funds due to lower interest rates.

      The average yield on interest-earning assets decreased 11 basis points
to 7.62% for the three months ended June 30, 1999 from 7.73 % for the three
months ended June 30, 1998, while the average cost on interest-bearing
liabilities decreased by 34 basis points to 4.07% for the three months ended
June 30, 1999 from 4.41% for the three months ended June 30, 1998.  As a
result of the Company's strategy to restructure the balance sheet by
expanding its small business lending activities in order to increase
interest rate spread, the interest rate spread increased to 3.55% for the
three months ended June 30, 1999 from 3.32% for the three months ended June
30, 1998 and the net interest margin improved from 3.54% to 3.87% during
this period.

Interest and Dividend Income. Total interest and dividend income increased
by $137,000 or 8.3% to $1.8 million for the three months ended June 30, 1999
from $1.6 million for the three months ended June 30, 1998.  The increase in
interest and dividend income was a result of a higher level of loans and a
greater mix of higher yielding commercial and commercial real estate loans,
partially offset by a decline in the average balance of investment
securities and lower yields on investment securities.  The average balance
of net loans for the three months ended June 30, 1999 was $60.9 million
compared to $45.5 million for the three months ended June 30, 1998.  The
average yield on net loans was 8.29% for the three months ended June 30,
1999 compared to 8.58% for the three months ended June 30, 1998, reflecting
a general decline in interest rates.  The average balance of investment
securities for the three months ended June 30, 1999 was $29.7 million
compared to $33.9 million for the three months ended June 30, 1998.  The
average yield on investment securities was 6.54% for the three months ended
June 30, 1999 compared to 7.03% for the three months ended June 30, 1998.

Interest Expense.  Interest expense decreased by $14,000 or 1.6 % to
$877,000 for the three months ended June 30, 1999 from $891,000 for the
three months ended June 30, 1998.  Interest expense decreased primarily as a
result of a decrease in interest rates paid on FHLB borrowings and deposit
accounts offset by an increase in the level of FHLB advances during the
periods.  Average interest-bearing deposits increased by $8.1 million or
13.9% to $66.0 million for the three months ended June 30, 1999.  Deposit
balances have increased as a result of offering free checking products,
certificate of deposit products with competitive rates and new deposits
attributable to the new Chelsea branch.  Accordingly, interest expense on
deposits increased $33,000 or 5.8% to $601,000 for the three months ended
June 30, 1999 compared to $568,000 for the three months ended June 30, 1998.
Interest expense on advances from the FHLB decreased $47,000 or 14.6% to
$276,000 for the three months ended June 30, 1999 from $323,000 for the
three months ended June 30, 1998.  This is attributable to a decline in the
rates paid on such advances, and the payment of such advances as they
matured.

Provision for Loan Losses.  The allowance for loan losses is maintained
through the provision for loan losses which is a charge to operations.  The
provision reflects management's assessment of potential losses and is based
on a review of the risk characteristics as well as the growth of the loan
portfolio.  The Bank considers many factors in determining the level of the
provision for loan losses.  Collateral value on a loan by loan basis, trends
of loan delinquencies, risk classification identified in the Bank's regular
review of individual loans, and economic conditions are major factors in
establishing the provision.  At June 30, 1999, the balance of the allowance
for loan losses was $593,000 or .90% of total loans versus $528,000 or 1.13%
of total loans at September 30, 1998.  As the Bank continues to expand its
small business lending, additional increases to the provision are likely.

Noninterest Income. Total noninterest income increased by $57,000 or 77.0%
to $131,000 for the three months ended June 30, 1999 from $74,000 for the
three months ended June 30, 1998.  The increase was primarily the result of
increased fees on transactional deposit accounts and serviced loans and the
adoption of FASB 125 - Capitalization of Mortgage Servicing Rights.  This
adoption  resulted in a one-time adjustment of $41,000.  The Company
anticipates increases to noninterest income as it continues to expand the
volume of its deposit relationships.  It is also the Company's goal to
increase its level of noninterest income by expanding its delivery systems
to include PC banking, debit cards and additional ATMs and by continually
considering additional sources of revenue.  In this regard, the Company
began offering various investment products through a relationship with a
third-party broker-dealer during the second quarter of its current fiscal
year.

Noninterest Expense. Noninterest expense increased by $196,000 or 30.6% to
$836,000 for the three months ended June 30, 1999 from $640,000 for the
three months ended June 30, 1998.  The increase resulted primarily from
planned expenditures in human and technological resources, including
increased staffing and non-recurring start up expenses associated with the
opening of the Chelsea branch.  Salaries and employee benefits, the largest
component of noninterest expense was $456,000 for the three months ended
June 30, 1999 as compared to $326,000 for the three months ended June 30,
1998, an increase of $130,000 or 39.9%.  This increase was primarily
associated with an increase of full time employees to staff the Bank's new
branch in Chelsea, commercial lending and operations departments.  Occupancy
and equipment expense increased by $40,000 or 47.1% to $125,000 for the
three months ended June 30, 1999 as compared to $85,000 for the three months
ended June 30, 1998, with the increase primarily related to additional space
utilized for certain administrative functions and the opening of the
Company's new Chelsea branch.  Other increases were incurred in the areas of
equipment, data processing and advertising services, primarily related to
the expansion of the Company's product lines and additional services,
including PC banking and debit cards, and the opening of the Chelsea branch.
Annual operating expenses are also expected to increase in future periods
due to the increased cost of operating an additional branch location and as
a stock institution, including the adoption of additional stock based
employee benefit plans.

Income Taxes.  The net provision for income taxes amounted to $55,000 for
the three months ended June 30, 1999 as compared to $50,000 for the three
months ended June 30, 1998, resulting in effective tax rate of 32.2% and
37.0%, respectively.  The effective tax rate reflects the Company's
utilization of a securities investment subsidiary to substantially reduce
state income taxes.

Comparison of the Operating Results for the
 Nine Months ended June 30, 1999 and 1998.

Net Income. The Company's net income for the nine months ended June 30, 1999
was $274,000 as compared to $208,000 for the nine months ended June 30,
1998.  This $66,000 or 31.7% increase in net income during the period was
the result of an increase of $198,000 in interest and dividend income, an
increase of $112,000 in other income, a decrease of $162,000 in interest
expense and a decrease in provision for loan losses of $102,000, partially
offset by an increase of $487,000 in operating expenses.  The increase in
other income was primarily the result of increased fees on transactional
deposit accounts and serviced loans and the adoption of FASB 125 -
Capitalization of Mortgage Servicing Rights.  This adoption resulted in a
one-time adjustment of $41,000. The Company's continued expansion of its
lending activities accounted for the increase in interest and dividend
income, while its operating expenses increased due to the Company's planned
expenditures in human and technological resources, including increased
staffing and non-recurring start-up expenses associated with the Bank's new
branch office in Chelsea, Massachusetts.  The return on average assets for
the nine months ended June 30, 1999 was .38% compared to .31% for the nine
months ended June 30, 1998.

Net Interest and Dividend Income. The Company's net interest and dividend
income for the nine months ended June 30, 1999 increased $360,000 or 16.8%
to $2.5 million from $2.1 million for the nine months ended June 30, 1998.
The increase can be attributed to a combination of the $198,000 increase in
interest and dividend income and a $162,000 decrease in interest expense on
deposits and borrowed funds due to lower interest rates.

      The average yield on interest-earning assets decreased 12 basis points
to 7.53% for the nine months ended June 30, 1999 from 7.65 % for the nine
months ended June 30, 1998, while the average cost on interest-bearing
liabilities decreased by 41 basis points to 4.16% for the nine months ended
June 30, 1999 from 4.57% for the nine months ended June 30, 1998.  As a
result of the Company's strategy to restructure the balance sheet by
expanding its small business lending activities in order to increase
interest rate spread, the interest rate spread increased to 3.37% for the
nine months ended June 30, 1999 from 3.08% for the nine months ended June
30, 1998 and the net interest margin improved from 3.35% to 3.71% during
this period.

Interest and Dividend Income. Total interest and dividend income increased
by $198,000 or 4.0% to $5.1 million for the nine months ended June 30, 1999
from $4.9 million for the nine months ended June 30, 1998.  The increase in
interest and dividend income was a result of a higher level of loans and a
greater mix of higher yielding commercial and commercial real estate loans,
partially offset by a decline in the average balance of investment
securities and lower yields on investment securities.  The average balance
of net loans for the nine months ended June 30, 1999 was $55.8 million
compared to $44.5 million for the nine months ended June 30, 1998.  The
average yield on net loans was 8.23% for the nine months ended June 30, 1999
compared to 8.48% for the nine months ended June 30, 1998, reflecting a
general decline in interest rates.  The average balance of investment
securities for the nine months ended June 30, 1999 was $30.1 million
compared to $35.0 million for the nine months ended June 30, 1998.  The
average yield on investment securities was 6.66% for the nine months ended
June 30, 1999 compared to 6.97% for the nine months ended June 30, 1998.

Interest Expense.  Interest expense decreased by $162,000 or 5.9 % to $2.6
million for the nine months ended June 30, 1999 from $2.7 million for the
nine months ended June 30, 1998.  Interest expense decreased primarily as a
result of a decrease in interest rates paid on FHLB borrowings and deposit
accounts and a significant decline in the level of FHLB advances during the
periods.  Average interest-bearing deposits increased by $8.4 million or
15.0% to $64.2 million for the nine months ended June 30, 1999.  Deposit
balances have increased as a result of offering free checking products,
certificate of deposit products with competitive rates and new deposits
attributable to the new Chelsea branch.  Accordingly, interest expense on
deposits increased $123,000 or 7.3% to $1.8 million for the nine months
ended June 30, 1999 compared to $1.7 million for the nine months ended June
30, 1998.  Interest expense on advances from the FHLB decreased $285,000 or
27.0% to $770,000 for the nine months ended June 30, 1999 from $1.1 million
for the nine months ended June 30, 1998.  This is attributable to a decline
in the rates paid on such advances, and the payment of such advances as they
matured.

Provision for Loan Losses.  The allowance for loan losses is maintained
through the provision for loan losses which is a charge to operations.  The
provision reflects management's assessment of potential losses and is based
on a review of the risk characteristics as well as the growth of the loan
portfolio.  The Bank considers many factors in determining the level of the
provision for loan losses.  Collateral value on a loan by loan basis, trends
of loan delinquencies, risk classification identified in the Bank's regular
review of individual loans, and economic conditions are major factors in
establishing the provision.  The provision for loan losses for the nine
months ended June 30, 1999 decreased by $102,000 or 58.6% to $72,000 from
$174,000 for the nine months ended June 30, 1998.  At June 30, 1999, the
balance of the allowance for loan losses was $593,000 or .90% of total
loans.  As the Bank continues to expand its small business lending,
additional increases to the provision are likely.

Noninterest Income. Total noninterest income increased by $112,000 or 48.7%
to $342,000 for the nine months ended June 30, 1999 from $230,000 for the
nine months ended June 30, 1998.  The increase was primarily the result of
increased fees on transactional deposit accounts and serviced loans and the
adoption of FASB 125 - Capitalization of Mortgage Servicing Rights.  This
adoption  resulted in a one-time adjustment of $41,000.  The Company
anticipates increases to noninterest income as it continues to expand the
volume of its deposit relationships.  It is also the Company's goal to
increase its level of noninterest income by expanding its delivery systems
to include PC banking, debit cards and additional ATMs and by continually
considering additional sources of revenue.  In this regard, the Company
began offering various investment products through a relationship with a
third-party broker-dealer during the second quarter of its current fiscal
year.

Noninterest Expense. Noninterest expense increased by $487,000 or 26.1%  to
$2.4 million for the nine months ended June 30, 1999 from $1.9 million for
the nine months ended June 30, 1998.  The increase resulted primarily from
planned expenditures in human and technological resources, including
increased staffing and non-recurring start up expenses associated with the
opening of the Chelsea branch.  Salaries and employee benefits, the largest
component of noninterest expense was $1.2 million for the nine months ended
June 30, 1999 as compared to $941,000 for the nine months ended June 30,
1998, an increase of $268,000 or 28.5%.  This increase was primarily
associated with an increase of full time employees to staff the Bank's new
branch in Chelsea, commercial lending and operations departments.  Occupancy
and equipment expense increased by $106,000 or 40.6% to $367,000 for the
nine months ended June 30, 1999 as compared to $261,000 for the nine months
ended June 30, 1998, with the increase primarily related to additional space
utilized for certain administrative functions and the opening of the
Company's new Chelsea branch.  Other increases were incurred in the areas of
equipment, data processing and advertising services, primarily related to
the expansion of the Company's product lines and additional services,
including PC banking and debit cards, and the opening of the Chelsea branch.
Annual operating expenses are also expected to increase in future periods
due to the increased cost of operating an additional branch location and as
a stock institution, including the adoption of additional stock based
employee benefit plans.

Income Taxes.  The net provision for income taxes amounted to $146,000 for
the nine months ended June 30, 1999 as compared to $125,000 for the nine
months ended June 30, 1998, resulting in effective tax rate of 34.8% and
37.5%, respectively.  The effective tax rate reflects the Company's
utilization of a securities investment subsidiary to substantially reduce
state income taxes.

Liquidity and Capital Resources

      The Company's primary sources of funds are deposits, proceeds from the
principal and interest payments on loans, debt and equity securities, and to
a lesser extent, borrowings and proceeds from the sale of fixed rate
mortgage loans to the secondary market.  While maturities and scheduled
amortization of loans and securities are predictable sources of funds,
deposit outflows, mortgage prepayments, mortgage loan sales, and borrowings
are greatly influenced by general interest rates, economic conditions and
competition.

      The Company is required to maintain adequate levels of liquid assets.
This guideline, which may be varied depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and short-term
borrowings.  The Company has historically maintained a level of liquid
assets in excess of regulatory requirements.  The Company's liquidity ratio
at June 30, 1999 was 5.76%.

      Liquidity management is both a daily and long-term function of
management.  If the Company requires funds beyond its ability to generate
them internally, the Company believes it could borrow additional funds from
the FHLB.  At June 30, 1999, the Company had borrowings of $23.3 million.

      At June 30, 1999, the Company had $5.1 million in outstanding
commitments to originate loans.  The Company anticipates that it will have
sufficient funds available to meet its current loan origination commitments.
Certificates of deposit which are scheduled to mature in one year or less
totaled $22.5 million at June 30, 1999.  Based on historical experience,
management believes that a significant portion of such deposits will remain
with the Bank.

      The Company expects to incur additional costs associated with the
Chelsea branch office and the main office, including costs associated with
the potential installation of an ATM and additional renovation costs.
Management anticipates that it will have sufficient funds available to meet
its planned capital expenditures throughout 1999.

      At June 30, 1999, the Company and the Bank exceeded all of their
regulatory capital requirements.

Year 2000

      The "Year 2000 Problem" centers on the inability of computer systems
to recognize the Year 2000.  Software, hardware, and equipment both within
and outside the Bank's direct control and with whom the Bank electronically
or operationally interfaces (e.g. third party vendors providing data
processing, information system management, maintenance of computer systems,
and credit bureau information) are likely to be affected.  Furthermore, if
computer systems are not adequately changed to identify the Year 2000, many
computer applications could fail or create erroneous results.  As a result,
many calculations which rely on the date field information, such as
interest, payment or due dates and other operating functions, will generate
results which could be significantly misstated, and the Bank could
experience a temporary inability to process transactions, send invoices or
engage in similar normal business activities.  In addition, noninformation
technology systems, such as equipment like telephones, copiers and elevators
may also contain embedded technology which control their operation and which
may be effected by the Year 2000 Problem.

      Under certain circumstances, failure to adequately address the Year
2000 Problem could adversely affect the viability of the Company's suppliers
and creditors and the creditworthiness of its borrowers.  Thus, if not
adequately addressed, the Year 2000 Problem could result in a significant
adverse impact on the Company's products, services and competitive
condition.

      In order to address the Year 2000 issue and to minimize its potential
adverse impact, management has begun a process to identify areas that will
be affected by the Year 2000 Problem, assess its potential impact on the
operations of the Company, monitor the progress of third party software
vendors in addressing the matter, test changes provided by these vendors,
and develop contingency plans for any critical systems which are not
effectively reprogrammed.  A committee of senior officers of the Company has
been formed to evaluate the effects that the upcoming Year 2000 could have
on computer programs utilized by the Company.  The Company's plan is divided
into the five phases: (1) awareness - define the problem, obtain executive
level support and develop an overall strategy; (2) assessment - identify all
systems and the criticality of the systems; (3) renovation - program
enhancements, hardware and software upgrades, system replacements, and
vendor certifications; (4) validation - test and verify system changes and
coordinate with outside parties; and (5) implementation - components
certified as Year 2000 compliant and moved to production.  As of June 30,
1999, the Company has completed the five phases.  The Company believes that
its internal systems and equipment are Year 2000 compliant.

      Third party vendors provide the majority of software used by the
Company.  All of the Company's vendors are aware of the Year 2000 situation,
and each has assured the Company that it is currently working to have its
software compliant by June, 1999.  The Bank utilizes the service of a third
party vendor to provide the software which is used to process and maintain
most mortgage and deposit customer-related accounts.  This vendor has
provided the Company with a software version which has been certified to be
Year 2000 compliant.  Testing by the Bank is underway to verify compliance
for its application and usage.  The Company presently believes that with
modifications to existing software and conversions to new software, the Year
2000 Problem will be mitigated without causing a material adverse impact on
the operations of the Company.  However, if such modifications and
conversions are not made, or are not completed timely, the Year 2000 Problem
could have an impact on the operations of the Company.

      The Company carefully considers the Year 2000 readiness of its
potential commercial borrowers in the lending process.  Commencing in
September 1998, each potential new commercial borrower was required to enter
into a Year 2000 agreement with the Company certifying that the borrower is
or will shortly be Year 2000 compliant.  Moreover, the failure to be Year
2000 compliant constitutes a default under the terms of new loan agreements
with commercial borrowers.  In addition, since April 1998, the Company has
monitored the Year 2000 compliance of its commercial borrowers asking them
to certify that they are Year 2000 compliant.  Follow up letters have been
sent to all commercial borrowers who have failed to respond to the Company's
Year 2000 inquiries.

      Monitoring and managing the year 2000 project will result in
additional direct and indirect costs to the Company.  Direct costs include
potential charges by third party software vendors  for product enhancements,
costs involved in testing software products for Year 2000 compliance, and
any resulting costs for developing and implementing contingency plans for
critical software products which are not enhanced. Indirect costs will
principally consist of the time devoted by existing employees in monitoring
software vendor progress, testing enhanced software products and
implementing any necessary contingency plans.  The Company has spent
approximately $40,000 on Year 2000 related costs to date and estimates that
it will spend an additional $7,000 for Year 2000 compliance.  Both direct
and indirect costs of addressing the Year 2000 Problem will be charged to
earnings as incurred.  The Company does not believe that such costs will
have a material effect on results of operations.  However, there can be no
guarantee that the systems of other companies on which the Company's systems
rely will be timely converted, or that a failure to convert by another
company or a conversion that is incompatible with the Company's systems,
would not have material adverse effect on the Company.  Although no
independent analysis of the Company's potential exposure has been obtained,
the Company believes it has no exposure to contingencies related to the Year
2000 Problem for the products it has sold.  The Company's network
consultant, EOS Systems, Inc., has examined the hardware and software used
by the Company and has certified that such hardware and software is Year
2000 compliant.

      The costs of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third
party modification plans and other factors.  However, there can be no
guarantee that these estimates will be achieved and actual results could
differ materially from those plans.  Specific factors that might cause such
material differences include, but are not limited to, the availability and
cost of personnel trained in this area, the ability to locate and correct
all relevant computer codes, and similar uncertainties.  The Company has
developed a contingency plan which would be implemented in the unlikely
event that Year 2000 issues arise.


PART II    OTHER INFORMATION

Item 4.    Submission of Matters to Vote of Security holders

       The Company held its Special Meeting of Shareholders ("Meeting") on
June 29, 1999.  All of the proposals submitted to the shareholders at the
Meeting were approved.  The proposals submitted to shareholders and the
tabulation of votes for each proposal is as follows:

       1.  Approval of 1999 RFS Bancorp, Inc. Stock Option Plan

       The number of votes cast with respect to this matter was as follows:

<TABLE>
<CAPTION>

            For      Against    Withheld    Broker Non-Votes
            ---      -------    --------    ----------------

          <S>         <C>          <C>            <C>
          719,765     29,150       375            0

</TABLE>

      2.  Approval of 1999 RFS Bancorp, Inc. Recognition and Retention Plan

      The number of votes cast with respect to this matter was as follows:

<TABLE>
<CAPTION>

            For      Against    Withheld    Broker Non-Votes
            ---      -------    --------    ----------------

          <S>         <C>          <C>            <C>
          720,140     28,775       375            0

</TABLE>


Item 6     Exhibits and Reports on Form 8-K

      (a)    Exhibits
             27.1 Financial Data Schedule

      (b)    Reports on Form 8-K
             None


                                 SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  RFS BANCORP, INC.

Date:                             By:  /s/ James J. McCarthy
                                       -----------------------------------
                                       James J. McCarthy
                                       President and Chief Executive Officer

Date: _________________________   By:  /s/ Anthony J. Patti
                                       -----------------------------------
                                       Anthony J. Patti
                                       Executive Vice President and
                                       Chief Financial Officer (principal
                                       accounting officer)