OFFICE OF THRIFT SUPERVISION
                             WASHINGTON, D.C. 20552
                           ---------------------------
                                   FORM 10-QSB
(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934
  For the quarterly period ended March  31, 1998

[ ] 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 0-23645

                          LEEDS FEDERAL BANKSHARES, INC
             (Exact name of registrant at specified in its charger)

                            UNITED STATES 52-2062351

                   (State or other jurisdiction (IRS Employer
            of incorporation or organization) Identification Number)

                       1101 Maiden Choice Lane, Baltimore,
                           Maryland 21229 (Address of
                          principal executive offices)

Registrant's telephone number, including area code:  410-242-1234

Former name, former address and former fiscal year, if changed since last report

         Indicated by a 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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date: There were 5,178,142
shares of the Registrant's  common stock  outstanding as of March 31, 1998 which
reflects 3-for-2 common stock split declared October 22, 1997.


<PAGE>

                          LEEDS FEDERAL BANKSHARES, INC

                                      INDEX



                                                                            PAGE
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Statements of Financial Condition as of 
          March 31, 1998 (unaudited), and June 30, 1997                       1

         Consolidated Statements of Income and Comprehensive Income 
          (unaudited) for the three months and  and nine months ended 
          March 31,1998 and 1997                                              2

         Consolidated Statements of Cash Flows (unaudited) for the 
          three months and nine months ended March 31, 1998 and 1997          3

         Notes to Consolidated Financial Statements (unaudited)               5

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operations                        8


PART II. OTHER INFORMATION                                                   12


<PAGE>

PART I. FINANCIAL INFORMATION
         Item 1. Financial Statements

                          LEEDS FEDERAL BANKSHARES, INC
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
                                                                     Mar 31,                   June 30,
                                                                      1998                       1997   
                                                                      ----                       ----   
                                                                  (unaudited)                  
Assets
    Cash:
<S>                                                               <C>                         <C>      
         On hand and due from banks                               $2,469,404                  2,158,453
         Interest-bearing deposits                                11,701,702                 11,172,475
    Short Term Investments                                        10,800,046                  2,722,336
    Secured short-term loans to commercial banks                  14,653,891                  9,735,532
    Securities purchased under agreements to resell                      -0-                  5,517,903
    Investment securities, net (held to maturity)                 34,381,313                 43,614,562
    Investment securities, net (available for sale)                9,428,026                  8,162,419
    Mortgage backed securities, net (held to maturity)            18,165,585                 22,294,337
    Loans receivable, net                                        187,727,143                174,877,796
    Investment in Federal Home Loan Bank of Atlanta stock, 
     at cost                                                       2,377,200                  2,377,200
    Property and equipment, net                                      874,532                    863,823
    Cash surrender value of life insurance                         6,066,179                  3,153,193
    Prepaid expenses and other assets                                351,884                    309,808
    Ground rents owned, at cost                                          -0-                     39,500
                                                               -------------                -----------
                                                                 298,996,905                286,999,337
                                                               -------------                -----------
Liabilities and Stockholders' Equity

    Savings accounts                                             242,810,457                232,590,009
    Borrowed Funds-Employee Stock Ownership Plan                     576,000                    648,000
    Advance payments by borrowers for taxes, insurance 
      and ground rents                                             3,716,667                  4,804,060
    Federal and state income taxes:
           Currently Payable                                         157,369                    335,841
           Deferred                                                1,391,225                  1,062,219
   Accrued expenses and other liabilities                          1,034,795                    817,871
                                                               -------------                -----------
         Total Liabilities                                       249,686,513                240,258,000
                                                               -------------                -----------

   Stockholders' Equity:
         Common Stock $1 par value:
           20,000,000 shares authorized:
           issued and outstanding 5,182,097 shares*                5,182,097                  5,182,097
         Additional paid in capital*                               9,099,098                  8,948,119
         Employee stock ownership plan                              (513,117)                  (591,300)
         Management recognition plan                                 (18,963)                   (60,141)
         Retained income, substantially restricted                33,668,609                 31,854,434
         Treasury Stock at cost: 3955 shares                         (83,055)                       -0-
         Other comprehensive income                                1,975,723                  1,408,128
                                                                ------------              -------------
         Total Stockholders' Equity                               49,310,392                 46,741,337
                                                               -------------                -----------
                                                                $298,996,905                286,999,337
                                                               -------------                -----------
</TABLE>

*    reflects 3-for-2 common stock split declared October 22,1997,  described in
     Note 3.

See accompanying notes to consolidated financial statements



<PAGE>

                          LEEDS FEDERAL BANKSHARES INC
           Consolidated Statements of Income and Comprehensive Income
                                   (unaudited)
<TABLE>
<CAPTION>
                                                          Nine Months                   Three Months
                                                        Ended March 31,                Ended March 31,
                                                     1998           1997            1998           1997
                                                     ----           ----            ----           ----
Interest Income:
<S>                                             <C>              <C>             <C>            <C>      
     First mortgage and other loans             $10,244,123      9,144,472       3,505,603      3,148,297
     Mortgage-backed securities                   1,107,812      1,445,667         340,438        454,229
     Investment securities and short term
     investments                                  3,842,790      3,970,078       1,245,234      1,308,383
                                                -----------     ----------      ----------      ---------
     Total interest income                       15,194,725     14,560,217       5,091,275      4,910,909
                                               ------------    -----------      ----------      ---------
Interest expense:
     Savings accounts                             9,007,802      8,626,836       3,021,146      2,844,942
     Other                                           42,920         47,880          14,029         15,857
                                                -----------        -------         -------         ------
     Total interest expense                       9,050,722      8,674,716       3,035,175      2,860,799
                                                -----------     ----------      ----------      ---------
     Net interest income                          6,144,003      5,885,501       2,056,100      2,050,110

Provision for loan losses                            10,886        132,816             -0-         30,059
                                                 ----------     ----------      ----------         ------
     Net interest income after provision 
      for loan losses                             6,133,117      5,752,685       2,056,100      2,020,051
                                                -----------     ----------      ----------      ---------
Noninterest income:
     Service fees and charges                       105,740         97,382          31,886         31,664
     Other                                          143,723        106,239          72,057         38,597
                                                -----------      ---------         -------      ---------
                                                    249,463        203,621         103,943         70,261
                                                   --------       --------        --------         ------
Noninterest expense:
     Compensation and employee benefits           1,341,327      1,114,302         446,464        386,586
     Occupancy                                      147,524        152,407          50,638         53,291
     SAIF deposit insurance premiums                166,217      1,699,601          55,212         26,307
     Advertising                                    159,061        109,306          43,080         48,366
     Other                                          551,179        471,134         205,786        173,614
                                                   --------       --------        --------        -------
                                                  2,365,308      3,546,750         801,180        688,164
                                                 ----------     ----------        --------        -------
     Income before provision for income taxes     4,017,272      2,409,556       1,358,863      1,402,148

Provision for income taxes                        1,470,390        929,282         495,209        541,510
                                                 ----------     ----------        --------        -------
     Net Income                                  $2,546,882      1,480,274         863,654        860,638
                                                -----------     ----------        --------        -------
Other comprehensive income(loss), net of tax

    Unrealized gains on securities                  567,596        301,855         240,022        (58,247)
                                                   --------       --------        --------       --------
Comprehensive income                             $3,114,478     $1,782,129      $1,103,676       $802,391
                                                -----------    -----------     -----------       -------- 
Net income per share of common stock                     

     Basic                                       $      .50      $     .29      $      .17       $    .17
                                                -----------      ---------      ----------       --------
     Diluted                                     $      .49      $     .29      $      .17       $    .17
                                                -----------      ---------      ----------       --------
</TABLE>
                                              
See accompaning notes to consolidated financial statements

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended March 31, 1998 and 1997
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                  1998              1997
                                                                                  ----              ----
<S>                                                                           <C>                <C>      
Cash flows from operating activities:
     Net Income
     Adjustments to reconcile net income to net cash provided by              $2,546,882         1,480,274
     operating activities:
      Amortization of loan fees, premiums and discounts,net                      (67,962)          (61,032)
      Provision for loan losses                                                   10,886           132,816
      Accretion of premiums(discounts) on investments securities and
     mortgage-backed securities, net                                             (13,661)          (30,637)
     Gain on sale of fixed asset                                                  (1,800)              -0-
      Depreciation                                                                77,864            92,459
      Non-cash compensation under stock based  benefit plans                     270,340           199,751
     (Increase) decrease in accrued interest receiveable on
     mortgage-backed securities and loans receiveable                            204,278           (15,651)
      Decrease in income taxes currently payable                                (178,472)          (43,265)
      Increase in accrued expenses and other liabilities                         216,924           145,938
      Increase in unearned loan fees                                               4,038           212,312
      Increase (decrease) in prepaid expenses and other assets                   (42,075)          128,318
     Amortization of net unrealized holding loss                                    (-0-)          (11,997)
                                                                                   -----       -----------
            Net cash provided by operating activities                          3,027,242         2,229,286
                                                                              ----------         ---------

Cash flows from investing activities:
     Purchase of investment securities held for maturity                     (22,456,844)       (5,400,000)
     Purchase of available for sale securities                                (1,175,000)         (300,000)
     Maturity of investment securities held for maturity                      31,585,031        13,104,940
     Maturity of available for sale securities                                   700,000              - 0-
     Principal repayment of investment securities                                  6,623              - 0-
     Loan disbursements, net                                                 (12,775,450)      (20,832,626)
     Mortgage-backed securities principal repayments                           4,120,708         4,550,885
     Purchases of property and equipment                                         (92,767)          (25,232)
     Sale of property and equipment                                                6,994               -0-
     Sale of ground rents owned                                                   39,500             1,600
     Investment in life insurance                                             (2,912,986)         (100,997)
                                                                             -----------         ---------
            Net cash used in investing activities                             (2,954,191)       (9,001,430)
                                                                             -----------       -----------
</TABLE>

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended March 31, 1998 and 1997
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                   1998              1997
                                                                                   ----              ----
Cash flows from financing activities:
<S>                                                                            <C>                <C>      
       Net increase in savings accounts                                        10,220,448         7,935,296
       Decrease in advance payments by borrowers for taxes insurance
        and ground rents                                                       (1,087,393)         (974,002)
      Proceeds from exercised options                                                 -0-            83,545
      Dividends paid                                                             (732,707)         (626,248)
      Stock repurchases                                                           (83,055)                -
       Repayment of Borrowed Funds                                                (72,000)          (72,000)
                                                                              -----------          --------
            Net cash provided by financing activities                           8,245,293         6,346,591
                                                                              -----------        ----------
Net increase (decrease) in cash and cash equivalents                            8,318,344          (425,553)
Cash and cash equivalents at beginning of period                               31,306,699        25,921,657
                                                                             ------------        ----------
Cash and cash equivalents at end of period                                    $39,625,043        25,496,104
                                                                             ------------        ----------
Non Cash Transactions - Increase in net unrealized gains on securities
available for sale, net of income tax effect.                                     567,595           305,422

</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>

                          LEEDS FEDERAL BANKSHARES INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1998
                                   (Unaudited)

(1)  Basis of Presentation

         The  accompanying   consolidated   financial   statements  include  all
adjustments,  consisting of normal recurring adjustments,  which, in the opinion
of management are necessary for a fair  presentation  of financial  position and
results of  operations.  The financial  statements  have been prepared using the
accounting policies described in the June 30, 1997 Annual Financial  Statements.
The results of  operations  for the three months and nine months ended March 31,
1998, are not necessarily indicative of the results that may be expected for the
entire year.

(2)  Reclassification of Prior Year's Statements.

         Certain amounts in the 1997 financial statements have been reclassified
to conform to the 1998 presentation.

(3)  Net Income per Share of Common Stock

         On November 19, 1997, the Leeds Federal  Savings Bank, the wholly owned
subsidiary  of  Leeds  Federal   Bankshares,Inc.   (The  Company),   declared  a
three-for-two common stock split in the form of a stock dividend to stockholders
of record on November 5, 1997.  All per share amounts  herein have been adjusted
for the common stock split.

         The Company adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share," during the three months ended December 31, 1997. Statement
No. 128 establishes  revised standards for computing and presenting earnings per
share (EPS) data. It requires dual  presentation of "basic" and "diluted" EPS on
the face of the  statements of income and  reconciliation  of the numerators and
denominators  used in the basic and  diluted  EPS  calculations.  As required by
Statement  No. 128, EPS data for prior periods  presented  have been restated to
conform to the new standard.

<PAGE>

         Basic EPS is calculated by dividing net income by the weighted  average
number of common shares  outstanding for the applicable  period.  Diluted EPS is
calculated  after  adjusting the numerator and the  denominator of the basic EPS
calculation for the effect of all dilutive  potential common shares  outstanding
during the  period.  Information  related to the  calculation  of net income per
share of common stock is summarized as follows:
<TABLE>
<CAPTION>
                                                           Nine Months                     Nine Months
                                                         Ended March 31,                 Ended March 31,
                                                             1998                            1997
                                                    Basic           Diluted          Basic          Diluted
                                                    -----           -------          -----          -------
<S>                                              <C>              <C>             <C>             <C>      
Net Income                                       2,546,882        2,546,882       1,480,274      1,480,274
Dividends on unvested common stock                  (5,861)          (2,318)        (10,166)        (7,915)
                                                   -------          -------      ----------      ---------
Adjusted net income used in EPS
     calculations                                2,541,021        2,544,564       1,470,108      1,472,359
                                                 ---------       ----------      ----------      ---------
Weighted average shares outstanding              5,086,817        5,086,817       5,056,623      5,056,623
Dilutive securities:
Options                                                -0-           97,944             -0-         35,930
Unvested common stock awards                           -0-            8.704             -0-          6,378
                                             -------------        ---------   -------------          -----
Adjusted weighted-average shares used
  in EPS computation                             5,086,817        5,193,465       5,056,623      5,098,931
                                              ------------        ---------       ---------      ---------


                                                 Three Months   March 31, 1998    Three Months     March 31,
                                                     Ended                            Ended          1997

                                                     Basic          Diluted           Basic        Diluted
                                                     -----          -------           -----        -------
Net Income                                         863,654          863,654         860,638        860,638
Dividends on unvested common stock                  (2,016)            (732)         (3,658)        (2,459)
                                                   -------       ----------        --------       --------
Adjusted net income used in EPS
    calculations                                   861,638          862,922         856,980        858,179
                                               -----------       ----------        --------        -------
Weighted average shares outstanding              5,086,817        5,086,817       5,056,623      5,056,623
Dilutive securities:
Options                                                -0-          103,206             -0-         53,098
Unvested common stock awards                           -0-            9,172             -0-          9,432
                                                ----------         --------     -----------          -----
Adjusted weighted-average shares used
  in EPS computation                             5,086,817        5,199,195       5,056,623      5,119,153
                                                 ---------        ---------      ----------      ---------
</TABLE>


<PAGE>

(4)  Dividends on Common Stock

         On March 18, 1998,  The Company  declared a quarterly  cash dividend of
$.14 per share. The dividends were payable to stockholders of record as of April
1, 1998 and were paid on April 22, 1998. Leeds Federal  Bankshares,  M.H.C. (the
MHC) , which owns  3,300,000  shares of stock in the Company,  waived receipt of
its  quarterly  dividend,   thereby  reducing  the  actual  dividend  payout  to
approximately  $260,700.  The dollar  amount of  dividends  waived by the MHC is
considered as a restriction on the retained earnings of the Company.  The amount
of any dividend waived by the MHC shall be available for declaration as dividend
solely to the MHC.  At March 31,  1998,  the  cumulative  amount of such  waived
dividends was $5,471,400.

(5)  Impact of New Accounting Standards

         In June 1997, the Financial  Accounting Standards Board ("FASB") issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income," which establishes standards for reporting and display of
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial  statements.  This statement is effective for fiscal years and interim
periods,  beginning  December 15, 1997 and has been  adopted  during the quarter
ended March 31, 1998. The  comprehensive  income and related  cumulative  equity
impact  of  comprehensive   income  items  will  be  required  to  be  disclosed
prominently  as part of the  financial  statements  or  notes  to the  financial
statements.  Only the  impact  of  unrealized  gains  or  losses  on  securities
available for sale is expected to be disclosed as an additional component of the
Company's income under the requirements of SFAS No. 130.

         In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an  Enterprise  and  Related  information,"  which  changes  the  way  public
companies  report  information  about segments of their business on their annual
financial statements and requires them to report selected segment information in
their  quarterly  reports issued to  shareholders.  It also requires entity wide
disclosures  about the  products and  services an entity  provides,  the foreign
countries in which it hold assets and reports revenues, and its major customers.
This statement is effective for fiscal years beginning after December 15, 1997.

         In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about  Pensions  and Other  Postretirement  Benefits,"  which  standardizes  the
disclosure requirements for pensions and other postretirement benefits, requires
additional  information on changes in the benefit obligations and fair values of
plan assets that will  facilitate  financial  analysis,  and eliminates  certain
disclosures  that the FASB no  longer  considers  as  useful  as when  they were
issued. This statement suggests combined formats for presentation of pension and
other postretirement benefit disclosures. This statement is effective for fiscal
years beginning after December 15, 1997.



<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.

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


Discussion of Financial Condition Changes from June 30, 1997 to March 31, 1998

         Cash on hand and due  from  banks,  interest  bearing  deposits,  other
liquid investments and investment securities (investments) totaled approximately
$85.8 million, an increase of approximately  $351,000 from June 30, 1997 levels.
Mortgage-backed  securities  totaled $18.2 million,  a decrease of $4.1 million,
due to repayments of principal.  Loans  receivable  totaled $187.7  million,  an
increase of $12.8 million,  mainly in residential mortgages,  which increase was
funded by  increased  savings  deposits  and the  decrease  in  mortgage  backed
securities.

         Savings accounts increased  approximately  $10.2 million, to a total of
$242.8 million at March 31, 1998.  Such increase was primarily  attributable  to
the general market  interest rate trends.  The Company has offered savings rates
that are  competitive  with other  institutions.  However,  it has not relied on
brokered funds or negotiated jumbo certificates to maintain deposit levels.

         The Company is subject to capital standards which generally require the
maintenance  of  regulatory  capital  sufficient  to meet  each of three  tests,
hereinafter  described as the  tangible  capital  requirement,  the core capital
requirement  and the  risk-based  capital  requirement.  At March 31, 1998,  the
Company  had  tangible  capital  of $47.3  million,  or 16.0% of total  adjusted
assets, which was $42.9 million in excess of the requirement of minimum tangible
capital of $4.4 million, or 1.5% of total adjusted assets; core capital of $47.3
million, or 16.0% of total adjusted assets, which was $38.4 million in excess of
the  requirement  of  minimum  core  capital of $8.9  million,  or 3.0% of total
adjusted  assets;  and  risk-based  capital of $47.9  million,  or 32.5% of risk
weighted  assets,  which was $36.1  million  in excess of the  requirement  of a
minimum risk-based capital of 8% of risk weighted assets.

Comparison of Operating Results for Three and Nine Month Periods Ended March 31,
1998 and 1997.

         The  Company's  net income for the three  months  ended March 31, 1998,
totaled  $864,000,  an increase of $3,000, as compared to $861,000 for the three
months ended March 31, 1997.  The Company's net income for the nine months ended
March 31, 1998, totaled $2.5 million, an increase of $218,000, or 9.3%, from net
income of $2.3 million  (before the one-time after tax assessment of $849,000 to
recapitalize the Savings  Association  Insurance Fund) for the nine months ended
March 31, 1997.  Such  increase was due primarily to an increase in net interest
income  and a decrease  in the  provision  for loan  losses of  $122,000.  After
recognition of the SAIF assessment, the Company's net income for the nine months
ended March 31, 1997, totaled $1.5 million.

Net Interest Income

         Interest  income on loans for the three  months  ended March 31,  1998,
totaled $3.5  million,  an increase of $357,000,  or 11.3%,  as compared to $3.1
million for the three months ended March 31, 1997,  due  principally  to a $19.0
million,  or 11.4%,  increase  in average  balance  of loans to $185.7  million.
Average yield on loans remained relatively unchanged at 7.6%. Interest income on
loans for the nine months  ended  March 31,  1998,  totaled  $10.2  million,  an
increase of $1.1  million,  as compared to the nine months ended March 31, 1997.
The average balances of loans increased by $19.5 million, to $180.6 million, for
the period, while average yield on loans remained relatively unchanged at 7.6%.


<PAGE>


Interest income on mortgage-backed  securities decreased by $114,000,  or 25.1%,
to $340,000 for the three months ended March 31, 1998,  from $454,000 during the
three months ended March 31, 1997. Average yield on  mortgage-backed  securities
remained relatively  unchanged at 7.3%, while average balance of mortgage-backed
securities  decreased by $6.4 million to $19.0 million from $25.4  million,  for
the three months  ended March 31,  1998,  compared to the same period last year.
Interest income on  mortgage-backed  securities  decreased by $338,000,  to $1.1
million for the nine months  ended March 31,  1998,  as compared to $1.4 million
for the same  period  last year.  Average  yield on  mortgage-backed  securities
remained relatively  unchanged at 7.3%, while average balance of mortgage-backed
securities  decreased by $6.3 million to $20.4 million from $26.7  million,  for
the nine months ended March 31, 1997.

         Interest income on investment securities,  certificates of deposit, and
short-term  investments  ("Investments")  decreased by $63,000, or 4.8%, to $1.2
million  during the three months ended March 31, 1998,  from $1.3 million during
the three  months ended March 31,  1997.  The  decrease in interest  income from
Investments  over the three month period  ended March 31,  1998,  from the three
month period ended March 31, 1997, was due to a $1.7 million decrease in average
balance of Investments  to $81.2 million from $82.9  million,  and a decrease in
average  yield of  Investments  to 6.1%,  from  6.3%.  Interest  on  Investments
decreased by  $127,000,  or 3.2%,  to $3.8 million  during the nine months ended
March 31, 1998,  from $4.0 million  during the nine months ended March 31, 1997.
Such  decrease was  attributable  to a $446,000  decrease in average  balance of
Investments  to $81.8  million,  from $82.2  million,  and a decrease in average
yield of Investments to 6.3% from 6.4%.

         Total interest expense  increased by approximately  $174,000 during the
quarter  ended March 31, 1998 to $3.0  million from $2.9 million for the quarter
ended March 31,  1997.  This  increase  was the result of an increase in average
interest  bearing  liabilities  to $240.8  million  from  $229.7  million and an
increase  in the average  rate paid on deposits to 5.1% from 5.0%.  For the nine
months ended March 31, 1998,  total  interest  expense  increased by $376,000 to
$9.1  million,  from $8.7  million for the quarter  ended  March 31,  1997.  The
increase was the result of a $9.6 million increase in average balances to $236.8
million from $227.2  million,  while the average rate paid on deposits  remained
relatively  unchanged  at 5.1%.  The  increase in average  balances  and average
yields was a result of general market conditions.

         As  a  result  of  the  foregoing  changes,  interest  income  remained
relatively  unchanged  at $2.1  million  during the three months ended March 31,
1998,  as compared to the three  months  ended March 31,  1997.  During the nine
months ended March 31, 1998, net interest income increased by 259,000,  or 4.4%,
to $6.1 million from $5.9 million for the same period last year.

Provision for Loan Losses

         The Company  had no  provision  for loan  losses for the quarter  ended
March 31, 1998,  and $30,000 for the quarter  ended March 31,  1997.  During the
nine months ended March 31, 1998, and 1997, the Company had a provision for loan
losses of $11,000 and $133,000,  respectively.  Based on management's review and
analysis  the  allowance  for loan losses as of March 31, 1998,  was  considered
adequate.

Noninterest Income

         Noninterest  income  increased  by  approximately  $34,000 to  $104,000
during the three months ended March 31, 1998, as compared to $70,000  during the
three  months  ended March 31,  1997,  as income on life  insurance  investments
increased by $33,000. For the nine months ended March 31, 1998,


<PAGE>



noninterest income increased $46,000 to $249,000, as compared to the same period
last year, due to an increase in income on life insurance investments.

Noninterest Expense

         Noninterest  expense  for  the  three  months  ended  March  31,  1998,
increased by approximately  $113,000, or 16.4%, to $801,000 from $688,000 during
the three  months  ended March 31,  1997.  Compensation  and  employee  benefits
expense  increased  by  $60,000  for the  quarter  ended  March  31,  1998,  due
principally to an increase in the non-cash charges for ESOP contributions  which
are accounted  for at the current  market price of the  Company's  stock.  Other
expenses  increased by $32,000  during the quarter  ended March 31,  1998,  as a
result of loss on the sale of the Company's  remaining ground rents.  During the
nine months ended March 31, 1998,  noninterest  expense increased  $201,000,  or
9.3%,  to $2.4  million,  from 2.2  million  (before  the  one-time  pretax SAIF
assessment of $1.4 million) for the same period last year.

Provision for Income Taxes

         The  effective  income tax rates for the three  months and nine  months
ended March 31, 1998, were 36.4% and 36.6%, respectively,  compared to 38.6% for
the three months and nine months  ended March 31, 1997.  The decrease was due to
increased state tax free investments.

Liquidity

The Company is required  to maintain  levels of liquid  assets as defined by OTS
regulations. This requirement,  which varies from time to time (currently set at
4%)  depending  upon  economic  conditions  and deposit  flows,  is based upon a
percentage of deposits and short-term borrowings.  The Company's liquidity ratio
averaged  40.58% during the quarter ended March 31, 1998,  and equaled 40.84% at
March 31, 1998.

Capability of the Company's Data Processing Software and Hardware to Accommodate
the Year 2000

The Company  relies upon computers for the daily conduct of its business and for
data  processing  generally.  There  is  concern  among  industry  experts  that
commencing on January 1, 2000,  computers  will be unable to "read" the new year
and there may be widespread  computer  malfunctions.  The Year 2000 issue is the
result of computer  programs  being written using two digits rather than four to
define the applicable  year. Any of the Company's  computer  programs that would
have date  sensitive  software may recognize a date during "00" as the year 1900
rather  than  the  year  2000.  This  could  result  in  a  systems  failure  or
miscalculations  causing disruptions of operations.  Management has assessed its
electronic systems, programs,  applications and other electronic components used
in the operations of the Company.  The Company contracts with service bureaus to
provide the  majority of its data  processing  and is dependent  upon  purchased
application  software.  Management  believes  that  it  has  implemented  a plan
pursuant to which the progress  toward full compliance of its service bureau and
other software  vendors will be tracked and tested well in advance of January 1,
2000.  Beginning  in the third  quarter of 1998,  the  Company  will  coordinate
end-to-end  tests with  primary  servicers,  which allow the Company to simulate
daily processing on sensitive century dates. The Company expects to complete the
Year 2000 project no later than December 31, 1998.  Management  believes that it
will not incur  significant  additional  costs in connection  with the year 2000
issue, although there can be no assurances in this regard.

Reorganization Into the Two-Tier Mutual Holding Company Structure

Effective   January  21,  1998,   Leeds  Federal   Savings  Bank  completed  its
reorganization   into  a  two-tier   mutual  holding   company   structure  (the
"Reorganization")  with the establishment of a Federal  corporation as the stock
holding  company  parent of the Bank. As a result of the  Reorganization,  Leeds
Federal  Bankshares,  MHC, the mutual  holding  company,  owns a majority of the
common  stock of the new stock  holding  company,  which owns 100% of the common
stock of the  Bank.  Management  believes  that  the  two-tier  holding  company
structure allows the new Company to retain the benefits of the mutual holding


<PAGE>


company  structure,  and  at  the  same  time  gives  the  Company  many  of the
opportunities  available  to stock  holding  companies  that  are not  currently
available in a mutual holding company  structure.  The mid-tier structure offers
the  Company  greater   flexibility  to  structure  and  complete   mergers  and
acquisitions,  to diversify operations,  and to repurchase outstanding shares of
common stock.

Stock Repurchase Plan To Repurchase Up To 275,000 Shares of Common Stock

On  April  15,  1998,  Leeds  Federal  Bankshares,  Inc.,  authorized  a plan to
repurchase up to 275,000 shares, or approximately  5.3%, of its Common Stock, as
a part of its capital management strategy.




<PAGE>


PART II.  OTHER INFORMATION

Legal Proceedings

The Bank is not  involved  in any  litigation,  nor is it  aware of any  pending
litigation,  other than legal proceedings  incidental to the Bank's business. In
the opinion of management,  no material loss is expected from any such claims or
lawsuits.

Changes in Securities and Use of Proceeds

Notes  To  Financial   Statements  are  incorporated  by  reference   concerning
discussion of waiver of dividends by Leeds Federal Bankshares, M.H.C.

Exhibits and Reports on Form 8-K

(a)  The following exhibits are filed as a part of this report: 
     Exhibit 27 EDGAR Financial Data Schedule

(b)  No Form 8-K reports were filed during the quarter.



<PAGE>


                                   SIGNATURES


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



                                    LEEDS FEDERAL SAVINGS BANK

Date:   May 12, 1998                By:  /s/ Gordon E. Clark
                                         -------------------
                                         Gordon E. Clark
                                         President and Chief Executive Officer



Date:   May 12, 1998                By:  /s/ Kathleen Trumpler
                                         ---------------------
                                         Kathleen Trumpler
                                         Treasurer and Chief Financial Officer