SECURITIES AND EXCHANGE COMMISSION
                             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, 1999

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

     For the transition period from _____________ to _____________

                         Commission File Number 0-23645

                          LEEDS FEDERAL BANKSHARES, INC
                          -----------------------------
             (Exact name of registrant as specified in its charter)

          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 4,937,156 shares
of the Registrant's common stock outstanding as of May 1, 1999.

<PAGE>

                          LEEDS FEDERAL BANKSHARES, INC

                                      INDEX

                                                                            PAGE
                                                                            ----
PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

    Consolidated Statements of Financial Condition as of
      March 31, 1999 (unaudited), and June 30, 1998 ......................    1

    Consolidated Statements of Income and Comprehensive Income (unaudited)
      for the three months and nine months ended March, 1999 and 1998 ....    2

    Consolidated Statements of Cash Flows (unaudited) for the nine months
      ended March 31, 1999 and 1998 ......................................    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.
                 STATEMENTS OF CONSOLIDATED FINANCIAL CONDITION


                                                       March 31,     June 30,
                                                         1999          1998
                                                     ------------   -----------
                                                      (unaudited)    (audited)
Assets
------
  Cash:
    On hand and due from banks ..................... $  1,865,412     1,769,493
    Interest-bearing deposits ......................   12,430,791    11,906,061
  Short-term investments ...........................    4,925,375     4,776,681
  Secured short-term loans to commercial banks .....   19,007,560    18,405,234
  Investment securities, net (held to maturity) ....   59,117,579    40,669,525
  Investment securities, net (available for sale) ..    6,509,312     8,034,695
  Mortgage backed securities, net (held to maturity)   11,436,851    16,514,383
  Loans receivable, net ............................  196,175,951   190,965,595
  Investment in Federal Home Loan Bank of Atlanta                              
    stock, at cost .................................    2,377,200     2,377,200
  Property and equipment, net ......................    1,455,944       851,265
  Cash surrender value of life insurance ...........    6,339,113     6,132,929
  Prepaid expenses and other assets ................      266,967       333,630
                                                     ------------   -----------
                                                     $321,908,055   302,736,691
                                                     ------------   -----------
Liabilities and Stockholders' Equity
------------------------------------
  Savings accounts ................................. $265,848,472   245,269,602
  Borrowed funds-Employee Stock Ownership Plan .....      504,000       552,000
  Advance payments by borrowers for taxes, insurance                           
    and ground rents ...............................    3,808,171     5,006,020
  Federal and state income taxes:                                              
    Currently payable ..............................      187,618       133,676
    Deferred .......................................    1,560,760     1,296,001
  Accrued expenses and other liabilities ...........    1,250,231     1,171,882
                                                     ------------   -----------
      Total Liabilities ............................  273,159,252   253,429,181
                                                     ------------   -----------
Stockholders' Equity:
  Common Stock $1 par value:
    20,000,000 shares authorized; 5,195,597 shares
      issued and 4,943,444 and 5,156,392 shares
      outstanding ..................................    5,195,597     5,195,597
  Additional paid-in capital .......................    9,350,679     9,258,917
  Employee stock ownership plan ....................     (414,154)     (487,891)
  Management recognition plan ......................          -0-       (11,907)
  Treasury stock, at cost (252,153 shares and
    39,205 shares) .................................   (3,827,107)     (772,430)
  Retained income, substantially restricted ........   36,074,849    34,162,743
  Accumulated other comprehensive income ...........    2,368,939     1,962,481
                                                     ------------   -----------
      Total Stockholders' Equity ...................   48,748,803    49,307,510
                                                     ------------   -----------
                                                     $321,908,055   302,736,691
                                                     ------------   -----------

See accompanying notes to consolidated financial statements.

                                       -1-

<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,
                                                         -----------------------  --------------------
                                                             1999        1998        1999       1998   
                                                         -----------  ----------  ---------  ---------
<S>                                                      <C>          <C>         <C>        <C>      
Interest Income:
  First mortgage and other loans ......................  $10,837,239  10,244,123  3,530,935  3,505,603
  Mortgage-backed securities ..........................      733,143   1,107,812    208,634    340,438
  Investment securities and short term investments ....    3,992,352   3,842,790  1,409,245  1,245,234
                                                         -----------  ----------  ---------  ---------
    Total interest income .............................   15,562,734  15,194,725  5,148,814  5,091,275
                                                         -----------  ----------  ---------  ---------
Interest expense:
  Savings accounts ....................................    9,645,274   9,007,802  3,235,966  3,021,146
  Other ...............................................       30,156      42,920      9,069     14,029
                                                         -----------  ----------  ---------  ---------
    Total interest expense ............................    9,675,430   9,050,722  3,245,035  3,035,175
                                                         -----------  ----------  ---------  ---------
    Net interest income ...............................    5,887,304   6,144,003  1,903,779  2,056,100

  Provision for loan losses ...........................       30,916      10,886        -0-        -0-
                                                         -----------  ----------  ---------  ---------
    Net interest income after provision for loan losses    5,856,388   6,133,117  1,903,779  2,056,100
                                                         -----------  ----------  ---------  ---------
Noninterest income:
  Service fees and charges ............................       98,697     105,740     31,456     31,886
  Other ...............................................      207,790     143,723     67,128     72,057
                                                         -----------  ----------  ---------  ---------
                                                             306,487     249,463     98,584    103,943
                                                         -----------  ----------  ---------  ---------
Noninterest expense:
  Compensation and employee benefits ..................    1,191,123   1,341,327    407,582    446,464
  Occupancy ...........................................      169,425     147,524     63,310     50,638
  SAIF deposit insurance premiums .....................      167,122     166,217     54,862     55,212
  Advertising .........................................       88,013     159,061     37,994     43,080
  Other ...............................................      512,463     551,179    170,879    205,786
                                                         -----------  ----------  ---------  ---------
                                                           2,128,146   2,365,308    734,627    801,180
                                                         -----------  ----------  ---------  ---------
  Income before provision for income taxes ............    4,034,729   4,017,272  1,267,736  1,358,863

Provision for income taxes: ...........................    1,438,274   1,470,390    450,086    495,209
                                                         -----------  ----------  ---------  ---------
    Net Income ........................................    2,596,455   2,546,882    817,650    863,654

Changes in accumulated other comprehensinve income--
  unrealized gains, (losses) on securities available
  for sale, net .......................................      406,458     567,596   (320,162)   240,022
                                                         -----------  ----------  ---------  ---------
Comprehensive income ..................................  $ 3,002,913   3,114,478    497,488  1,103,676
                                                         -----------  ----------  ---------  ---------
Net income per share of common stock
  Basic ...............................................       $  .52      $  .50     $  .16     $  .17
                                                              ------      ------     ------     ------
  Diluted .............................................       $  .51      $  .49     $  .16     $  .17
                                                              ------      ------     ------     ------
</TABLE>

See accompanying notes to consolidated financial statements.

                                      -2-

<PAGE>


                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended March 31, 1999 and 1998
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    1999          1998
                                                                -----------   -----------
<S>                                                             <C>           <C>      
Cash flows from operating activities:
  Net Income .................................................  $ 2,596,455     2,546,882
  Adjustments to reconcile net income to net cash provided
    by operating activities:
      Amortization of loan fees, premiums and discounts, net .     (185,378)      (67,962)
      Provision for loan losses ..............................       30,916        10,886
      Accretion of premiums(discounts) on investments
        securities and mortgage-backed securities, net .......      (31,765)      (13,661)
      Gain on sale of fixed asset ............................          -0-        (1,800)
      Depreciation ...........................................      102,488        77,864
      Non-cash compensation under stock based benefit plans ..      177,406       270,340
      (Increase)decrease in accrued interest receivable on
        securities and loans receivable ......................      (53,904)      204,278
      Increase (decrease) in income taxes currently payable ..       53,942      (178,472)
      Increase in accrued expenses and other liabilities .....       78,349       216,924
      Increase (decrease) in unearned loan fees ..............      (58,825)        4,038
      (Increase) decrease in prepaid expenses and other assets       66,663       (42,075)
                                                                -----------   -----------
          Net cash provided by operating activities ..........    2,776,347     3,027,242
                                                                -----------   -----------
Cash flows from investing activities:
  Purchase of investment securities held to maturity .........  (60,680,000)  (22,456,844)
  Purchase of securities available for sale ..................     (900,000)   (1,175,000)
  Maturity of investment securities held to maturity .........   42,371,803    31,585,031
  Maturity of securities available for sale ..................    3,000,000       700,000
  Principal repayment of investment securities ...............          -0-         6,623
  Loan disbursements, net of repayments ......................   (4,932,532)  (12,775,450)
  Mortgage-backed securities held to maturity principal
    repayments ...............................................    5,055,407     4,120,708
  Purchases of property and equipment ........................     (707,167)      (92,767)
  Sale of property and equipment .............................          -0-         6,994
  Sale of ground rents owned .................................          -0-        39,500
  Investment in life insurance policies ......................     (206,184)   (2,912,988)
                                                                -----------   -----------
          Net cash used in investing activities ..............  (16,998,673)   (2,954,191)
                                                                -----------   -----------
</TABLE>







                                      -3-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Nine months ended March 31, 1999 and 1998
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    1999          1998
                                                                -----------   -----------
<S>                                                             <C>           <C>      
Cash flows from financing activities:
   Net increase in savings accounts ..........................   20,578,870    10,220,448
   Decrease in advance payments by borrowers for
     taxes, insurance and ground rents .......................   (1,197,849)   (1,087,393)
   Payment of dividends ......................................     (684,349)     (732,707)
   Purchase of treasury stock ................................   (3,054,677)      (83,055)
   Repayment of borrowed funds ...............................      (48,000)      (72,000)
                                                                -----------   -----------
          Net cash provided by financing activities ..........   15,593,995     8,245,293
                                                                -----------   -----------
Net increase in cash and cash equivalents ....................    1,371,669     8,318,344

Cash and cash equivalents at beginning of period .............   36,857,469    31,306,699
                                                                -----------   -----------
Cash and cash equivalents at end of period ...................  $38,229,138    39,625,043
                                                                -----------   -----------
</TABLE>







See accompanying notes to consolidated financial statements.

                                      -4-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)


(1)  Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
Leeds Federal  Bankshares,  Inc.(the  Company) and its wholly owned  subsidiary,
Leeds Federal Savings Bank. Leeds Investment Corporation (the Subsidiary),  is a
wholly owned subsidiary of Leeds Federal Savings Bank (collectively,  the Bank).
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  have been recorded.  The financial  statements  have been
prepared  using the  accounting  policies  described in the June 30, 1998 Annual
Report.  The results of  operations  for the three  months and nine months ended
March 31,  1999,  are not  necessarily  indicative  of the  results  that may be
expected for the entire year.

     In preparing the consolidated financial statements,  management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated statements of financial condition
and income and comprehensive income for the period.  Actual results could differ
significantly from those estimates.


(2)  Net Income per Share of Common Stock

     Basic  earnings per share (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:



                                      -5-

<PAGE>

<TABLE>
<CAPTION>
                                             Nine Months             Nine Months
                                           Ended March 31,         Ended March 31,
                                                1999                     1998
                                       ----------------------   ---------------------
                                          Basic      Diluted      Basic      Diluted
                                       ----------   ---------   ---------   ---------
<S>                                    <C>          <C>         <C>         <C>       
Net Income ..........................  $2,596,455   2,596,445   2,546,882   2,546,882

Dividends on unvested common stock ..      (4,032)     (2,362)     (5,861)     (2,318)
                                       ----------   ---------   ---------   ---------
Adjusted net income used in EPS
  calculations ......................  $2,592,423   2,594,093   2,541,021   2,544,564
                                       ----------   ---------   ---------   ---------
Weighted average shares outstanding .   5,024,652   5,024,652   5,086,817   5,086,817

Dilutive securities:
  Options ...........................         -0-      70,037         -0-      97,944
  Unvested common stock awards ......         -0-         -0-         -0-       8,704
                                       ----------   ---------   ---------   ---------
Adjusted weighted-average shares used
  in EPS computation ................   5,024,652   5,094,689   5,086,817   5,193,465
                                       ----------   ---------   ---------   ---------
</TABLE>

<TABLE>
<CAPTION>
                                            Three Months            Three Months
                                           Ended March 31,         Ended March 31,
                                                1999                    1998
                                       ----------------------   ---------------------
                                          Basic      Diluted      Basic      Diluted
                                       ----------   ---------   ---------   ---------
<S>                                    <C>          <C>         <C>         <C>       
Net Income ..........................  $  817,650     817,650     863,654     863,654

Dividends on unvested common stock ..         -0-         -0-      (2,016)       (732)
                                       ----------   ---------   ---------   ---------
Adjusted net income used in EPS
  calculations ......................  $  817,650     817,650     861,638     862,922
                                       ----------   ---------   ---------   ---------
Weighted average shares outstanding .   4,960,555   4,960,555   5,086,817   5,086,817

Dilutive securities:
  Options ...........................         -0-      61,511         -0-     103,206
  Unvested common stock awards ......         -0-         -0-         -0-       9,172
                                       ----------   ---------   ---------   ---------
Adjusted weighted-average shares used
  in EPS computation ................   4,960,555   5,022,066   5,086,817   5,199,195
                                       ----------   ---------   ---------   ---------
</TABLE>







                                      -6-

<PAGE>

(3)  Dividends on Common Stock

     On March 16, 1999,  the Company  declared a quarterly cash dividend of $.14
per share.  The dividends were payable to  stockholders of record as of April 7,
1999 and were paid on April 21, 1999.  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
$230,000.  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 of a dividend solely to the
MHC. At March 31,  1999,  the  cumulative  amount of such waived  dividends  was
$7,319,400.


(4)  Impact of New Accounting Standards

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133  establishes  accounting and
reporting  standards for derivative  instruments,  including certain  derivative
instruments   embedded  in  other   contracts   (collectively   referred  to  as
derivatives),  and for hedging activities.  SFAS No. 133 requires that an entity
recognize all  derivatives  as either assets or  liabilities in the statement of
financial  position and measure those instruments at fair value. It is effective
for all fiscal quarters of fiscal years  beginning after June 15, 1999.  Initial
application  of this  Statement  should be as of the  beginning  of an  entity's
fiscal quarter. On that date, hedging  relationships must be designated anew and
documented  pursuant to the provisions of SFAS No. 133.  Earlier  application is
encouraged, but is permitted only as of the beginning of any fiscal quarter that
begins after issuance of SFAS No. 133. It should not be applied retroactively to
financial  statements of prior periods.  Management  has not determined  when it
will adopt the  provisions  of SFAS No. 133 but believes that it will not have a
material effect on the Company's financial position or results of operations.







                                      -7-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.


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


Forward Looking Statements
--------------------------

     In addition to  historical  information,  this  Quarterly  Report  contains
forward-looking  statements.  The forward-looking  statements  contained in this
document are subject to certain risks and uncertainties  that could cause actual
results  to  differ  materially  from  those  projected  in the  forward-looking
statements.  Important factors that might cause such a difference  include,  but
are not limited to,  those  discussed  in this  section  entitled  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations."
Readers should not place undue reliance on these forward-looking  statements, as
they reflect  management's  analysis as of the date of this report.  The Company
has no  obligation  to update  or revise  these  forward-looking  statements  to
reflect  events or  circumstances  that  occur  after  the date of this  report.
Readers should  carefully  review the risk factors  described in other documents
the Company files from time to time with the Securities and Exchange Commission,
including current reports filed on Form 8-K.


Discussion of Financial Condition Changes from June 30, 1998 to March 31, 1999
------------------------------------------------------------------------------

     Cash on hand and due from banks,  interest bearing  deposits,  other liquid
investments and investment  securities totaled  approximately $106.2 million, an
increase  of   approximately   $18.3   million   from  June  30,  1998   levels.
Mortgage-backed  securities  totaled $11.4 million,  a decrease of $5.1 million,
due to repayments of principal.  Loans  receivable  totaled $196.2  million,  an
increase of $5.2  million,  mainly in  residential  mortgages.  The increase was
funded by  increased  savings  deposits  and the  decrease  in  mortgage  backed
securities.

     Savings  accounts  increased  approximately  $20.5  million,  to a total of
$265.8 million at March 31, 1999.  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 Tier 1 core capital  requirement,  the Tier 1 risk
based capital requirement and the total risk-based capital requirement. At March
31,  1999,  the Company had Tier 1 core  capital of $46.4  million,  or 14.6% of
total adjusted  assets,  which was $33.7 million in excess of the requirement of
minimum core capital of $12.7 million,  or 4.0% of total adjusted assets; Tier 1
risk-based capital of $46.4 million, or 30.9% of risk weighted assets, which was
$40.4 million in excess of the requirement of a minimum risk-based capital of 4%
of risk weighted assets; and total risk-based capital of $48.9 million, or 32.6%
of risk weighted assets, which was $36.9 million in excess of the requirement of
a minimum total risk-based capital of 8% of total risk weighted assets.


Comparison of Operating Results for Three and Nine Month Periods Ended
March 31, 1999 and 1998.
----------------------------------------------------------------------

     The Company's net income for the three months ended March 31, 1999, totaled
$818,000,  a decrease of $46,000,  as compared to $864,000  for the three months
ended March 31,  1998.  Such  decrease  was due  primarily  to a decrease in net
interest  income,  partially offset by a decrease in noninterest  expenses.  The
Company's  net income for the nine months  ended March 31,  1999,  totaled  $2.6
million,  an increase of $50,000,  or 1.9%,  from net income of $2.5 million for
the nine months  ended March 31, 1998.  Such  increase was due to an increase in
noninterest income and a decrease in noninterest expense,  partially offset by a
decrease in net interest income.


                                      -8-

<PAGE>

Net Interest Income
-------------------

     Interest income on loans remained relatively  unchanged at $3.5 million for
the three months ended March 31, 1999,  and March 31, 1998. The average yield on
loans for the three months ended March 31,  1999,  decreased to 7.2%,  from 7.6%
for the same period last year,  while the balance of average loans  increased by
$10.2 million to $195.9  million.  Interest  income on loans for the nine months
ended March 31,  1999,  totaled  $10.8  million,  an increase  of  $593,000,  as
compared to the nine months ended March 31, 1998. The average  balances of loans
increased by $13.5 million, to $194.2 million, for the period, while the average
yield on loans  decreased to 7.4%,  from 7.6%. The decrease in the average yield
on loans was due  principally to lower rates on newly  originated  mortgages and
the effect of a nonperforming $2.5 million commercial loan.

     Interest income on  mortgage-backed  securities  decreased by $131,000,  or
38.5%,  to $209,000 for the three months  ended March 31,  1999,  from  $340,000
during  the  three  months  ended  March  31,   1998.   The  average   yield  on
mortgage-backed  securities  decreased  to 6.8%,  from 7.3%,  while the  average
balance of mortgage-backed securities decreased by $6.7 million to $12.3 million
from $19.0 million,  for the three months ended March 31, 1999,  compared to the
same period last year. Interest income on mortgage-backed  securities  decreased
by $375,000,  to $733,000 for the nine months ended March 31, 1999,  as compared
to  $1.1  million  for  the  same  period  last  year.   The  average  yield  on
mortgage-backed  securities  decreased  to 7.0%,  from 7.3%,  while the  average
balance of mortgage-backed securities decreased by $6.4 million to $14.0 million
from $20.4 million, for the nine months ended March 31, 1998.

     Interest  income  on  investment  securities  and  short-term   investments
("Investments")  increased by  $164,000,  or 13.2%,  to $1.4 million  during the
three  months ended March 31,  1999,  from $1.2 million  during the three months
ended March 31, 1998. This increase in interest income from Investments, was due
to a $21.8 million  increase in average balance of Investments to $103.0 million
from  $81.2  million,  partially  offset  by a  decrease  in  average  yield  of
Investments to 5.5%, from 6.1%.  Interest on Investments  increased by $150,000,
or 3.9%, to $4.0 million during the nine months ended March 31, 1999,  from $3.8
million  during  the nine  months  ended  March  31,  1998.  Such  increase  was
attributable  to an $11.0 million  increase in average balance of Investments to
$92.8  million,  from $81.8 million,  partially  offset by a decrease in average
yield of Investments to 5.7% from 6.3%.

     Total  interest  expense  increased by  approximately  $210,000  during the
quarter  ended March 31, 1999 to $3.2  million from $3.0 million for the quarter
ended March 31,  1998.  This  increase  was the result of an increase in average
interest  bearing  liabilities to $262.1 million from $240.8 million,  while the
average rate paid on deposits  remained  relatively  unchanged at 5.0%.  For the
nine months ended March 31, 1999, total interest  expense  increased by $624,000
to $9.7 million, from $9.1 million for the nine months ended March 31, 1998. The
increase  was the result of a $17.6  million  increase  in average  balances  to
$254.4  million  from $236.8  million,  while the average  rate paid on deposits
remained relatively unchanged at 5.1%.

     As a result of the  foregoing  changes,  net interest  income  decreased by
$152,000  to $1.9  million  during the three  months  ended March 31,  1999,  as
compared to $2.1 million for the three  months ended March 31, 1998.  During the
nine months ended March 31, 1999, net interest income  decreased by 257,000,  or
4.2%, to $5.9 million from $6.1 million for the same period last year.


Provision for Loan Losses
-------------------------

     The Company had no provision  for loan losses for the quarters  ended March
31, 1999,  and 1998.  During the nine months ended March 31, 1999, and 1998, the
Company had a provision  for loan losses of $31,000 and  $11,000,  respectively.
The  allowance  for loan  losses  which  was  $754,000  at March  31,  1999,  is
established in accordance  with  generally  accepted  accounting  principles and
exists to absorb losses  inherent in the Company's  overall loan  portfolio.  In
addition to historical loss experience, the Company considers other factors that
are likely to cause estimated credit losses  associated with the loan portfolio;
namely, changes in economic and business conditions and developments, changes in
the nature and volume of the  portfolio  and trends in the level of its past due
and classified loans. Based on management's  review and analysis,  the allowance
for loan losses as of March 31, 1999, was considered adequate.


                                      -9-

<PAGE>

Noninterest Income
------------------

     Noninterest income decreased by approximately  $5,000 to $99,000 during the
three  months  ended March 31,  1999,  as compared to $104,000  during the three
months  ended  March  31,  1998.  For the nine  months  ended  March  31,  1999,
noninterest income increased $57,000 to $306,000, 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, 1999, decreased by
approximately  $66,000,  or 8.2%,  to $735,000  from  $801,000  during the three
months  ended  March  31,  1998.  Compensation  and  employee  benefits  expense
decreased by $39,000 for the quarter ended March 31, 1999, due  principally to a
decrease in the non-cash charges for ESOP contributions  which are accounted for
at the current market price of the Company's stock.  Other expenses decreased by
$35,000  during  the  quarter  ended  March 31,  1999,  as a result  of  general
decreases in expenses.  During the nine months ended March 31, 1999, noninterest
expense  decreased  $237,000,  or  10.0%,  to $2.1  million,  from 2.4  million.
Compensation and employee benefits decreased  $150,000,  Advertising by $71,000,
due principally to non-cash charges for ESOP  contributions  and lower levels of
advertising  during the nine months ended March 31,  1999,  compared to the same
period last year.


Provision for Income Taxes
--------------------------

     The  effective  income tax rates for the three months and nine months ended
March 31, 1999, were approximately  35.5% and 35.6%,  respectively,  compared to
36.4% and 36.6%,  respectively  for the three months and nine months ended March
31, 1998. The decrease was due to increased state tax free investments.


Classified Loans
----------------

     Loans  which were 90 or more days  delinquent  but still  accruing  totaled
$19,000 at March 31, 1999,  and $5,000 at June 30,  1998.  Loans 90 or more days
delinquent  and not accruing  totaled  $2.6 million at March 31, 1999,  and $2.5
million at June 30, 1998. At March 31, 1999, the Company had a $2.5 million loan
which matured in June,  1998,  and has not been repaid.  Subsequent to March 31,
1999,  the borrower  has  declared  bankruptcy,  and the  scheduled  foreclosure
proceedings on the loan have been temporarily suspended. Management has obtained
an appraisal, and based on the appraisal and other factors, believes the Company
will not incur a material loss on this loan.


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  41.8% during the quarter  ended March 31, 1999,  and equaled  42.9% at
March 31, 1999.


                                      -10-

<PAGE>

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

     The following  information  constitutes  "Year 2000  Readiness  Disclosure"
under the Year 2000 Information and Readiness Disclosure Act.

     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 able to "read" the new year and
there may be widespread computer malfunctions. The Year 2000 ("Y2K) 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. The Board of Directors of the
Company  formed a Y2K Project  Team to address how the Bank will prepare for the
Y2K.  The  Project  Team,  with the strong  support  and  involvement  of senior
management,  developed  an Action  Plan  comprise  of five  phases;  assessment,
evaluation,   renovation,   validation  and  implementation.   The  Company  has
substantially completed all of the five phases for both its internal systems and
those of outside vendors and servicers of systems we use. The Company  contracts
with  service  bureaus to provide  the  majority of its data  processing  and is
dependent  upon purchased  application  software.  Management  believes that all
"mission  critical"  systems have been  identified  and have been tested for Y2K
compliance.  Bank  personnel  have  participated  with the major provider of our
systems in a test of our equipment and our connections to the data center.  Some
of the smaller systems were tested by other institutions by proxy, as defined by
the regulators.  The Company  believes that the potential  effects on operations
from Y2K issues can and will be addressed prior to the Y2K. However,  unforeseen
circumstances could arise,  disrupting normal business operations.  To this end,
the Company has adopted a  contingency  plan to address  alternative  methods to
enable  the  Company to  continue  to offer  basic  services  to its  customers.
Extensive  training of its  personnel  and testing of the  contingency  plan has
begun and will  continue  throughout  1999.  There can be no assurance  that the
Company's  contingency  plan will fully  mitigate the effects of such  potential
failures.  The Company  has  contacted  its  commercial  borrowers  and has been
informed that they are either  compliant or in process of becoming  compliant in
connection with the Year 2000 issue. As commercial  loans represent less than 2%
of its assets,  the Company  believes  that the effect of the Year 2000 issue on
the  Company's  commercial  borrowers  will not have an  adverse  effect  on the
Company in  general.  The Company  has not  incurred  any  material  costs,  and
management  believes  that it  will  incur  costs  of no more  than  $25,000  in
connection  with the Y2K  issue,  although  there can be no  assurances  in this
regard.


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

     As of March 31, 1999,  the Company has  repurchased  252,153  shares of its
common stock in connection with its plan to repurchase up to 275,000 shares,  or
approximately  5.3%,  of its  outstanding  shares of common stock as part of its
capital management strategy.


                                      -11-

<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.


Exhibits and Report on Form 8-K
-------------------------------

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

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


                                      -12-

<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 BANKSHARES, INC.



Date: May 11, 1999                     By: /s/ Gordon E. Clark
      ---------------------                -------------------------------------
                                           Gordon E. Clark
                                           President and Chief Executive Officer



Date: May 11, 1999                     By: /s/ Kathleen Trumpler
      ---------------------                -------------------------------------
                                           Kathleen Trumpler
                                           Treasurer and Chief Financial Officer







                                      -13-