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 September 30, 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 4,798,341 shares
of the Registrant's common stock outstanding as of October 1, 1999.

<PAGE>

                          LEEDS FEDERAL BANKSHARES, INC

                                      INDEX


                                                                            PAGE
                                                                            ----
PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

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

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

    Consolidated Statements of Cash Flows (unaudited) for the three months
      ended September 30, 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


                                                     September 30,    June 30,
                                                          1999          1999
                                                     -------------  -----------
                                                      (unaudited)    (audited)
Assets
------
  Cash:
    On hand and due from banks .....................  $  2,553,515    5,093,316
    Interest-bearing deposits ......................     2,063,298    4,964,126
  Short-term investments ...........................    12,156,045   12,941,254
  Secured short-term loans to commercial banks .....     2,453,239   10,011,970
  Investment securities, net (held to maturity) ....    67,717,240   66,167,181
  Investment securities, net (available for sale) ..     6,100,221    6,551,478
  Mortgage backed securities, net (held to maturity)     9,507,004   10,008,111
  Loans receivable, net ............................   215,568,314  203,886,170
  Investment in Federal Home Loan Bank of Atlanta
    stock, at cost .................................     1,935,700    1,935,700
  Property and equipment, net ......................     1,535,261    1,484,620
  Cash surrender value of life insurance ...........     6,461,948    6,399,473
  Accrued interest receivable ......................     2,026,620    1,994,604
  Prepaid expenses and other assets ................       224,212      204,020
                                                      ------------  -----------
      Total assets .................................  $330,302,617  331,642,023
                                                      ------------  -----------

Liabilities and Stockholders' Equity
------------------------------------
  Savings accounts .................................  $277,084,798  274,625,611
  Borrowed funds-Employee Stock Ownership Plan .....       456,000      470,813
  Advance payments by borrowers for taxes, insurance
    and ground rents ...............................     1,296,231    5,203,532
  Federal and state income taxes:
    Currently payable ..............................       574,693      107,577
    Deferred .......................................     1,220,950    1,393,803
  Accrued expenses and other liabilities ...........     1,416,222    1,336,275
                                                      ------------  -----------
     Total liabilities .............................   282,048,894  283,137,611
                                                      ------------  -----------
Stockholders' Equity:
  Common Stock $1 par value:
    20,000,000 shares authorized; 5,195,597 shares
    issued and outstanding .........................     5,195,597    5,195,597
  Additional paid-in capital .......................     9,382,942    9,367,161
  Employee stock ownership plan ....................      (367,201)    (390,682)
  Treasury stock, at cost,(397,256 shares and
    331,941 shares) ................................    (5,485,484)  (4,740,869)
  Retained income, substantially restricted ........    37,467,385   36,734,317
  Accumulated other comprehensive income ...........     2,060,484    2,338,888
                                                      ------------  -----------
      Total stockholders' equity ...................    48,253,723   48,504,412
                                                      ------------  -----------
                                                      $330,302,617  331,642,023
                                                      ------------  -----------

See accompanying notes to consolidated financial statements.


                                      -1-

<PAGE>

                          LEEDS FEDERAL BANKSHARES, INC
           Consolidated Statements of Income and Comprehensive Income
                                   (Unaudited)


                                                Three Months Ended September 30,
                                                --------------------------------
                                                      1999            1998
                                                   ----------      ----------
Interest Income:
  First mortgage and other loans ...............   $3,722,728      $3,703,894
  Mortgage-backed securities ...................      162,832         277,088
  Investment securities and short-term
    investments ................................    1,562,993       1,285,630
                                                   ----------      ----------
      Total interest income ....................    5,448,553       5,266,612
                                                   ----------      ----------
Interest expense:
  Savings accounts .............................    3,412,117       3,185,659
  Other ........................................        9,508          12,223
                                                   ----------      ----------
      Total interest expense ...................    3,421,625       3,197,882
                                                   ----------      ----------
      Net interest income ......................    2,026,928       2,068,730

  Provision for loan losses ....................       12,374          29,306
                                                   ----------      ----------
      Net interest income after provision
        for loan losses ........................    2,014,554       2,039,424
                                                   ----------      ----------
Noninterest income:
  Service fees and charges .....................       37,027          34,335
  Other ........................................       62,475          73,108
                                                   ----------      ----------
                                                       99,502         107,443
                                                   ----------      ----------
Noninterest expense:
  Compensation and employee benefits ...........      378,452         399,507
  Occupancy ....................................       65,229          53,896
  SAIF deposit insurance premiums ..............       59,807          56,713
  Advertising ..................................       33,902          30,764
  Other ........................................      146,159         168,921
                                                   ----------      ----------
                                                      683,549         709,801
                                                   ----------      ----------
  Income before provision for income taxes .....    1,430,507       1,437,066

Provision for income taxes .....................      497,967         513,896
                                                   ----------      ----------
  Net Income ...................................      932,540         923,170
                                                   ----------      ----------
Other comprensive income, net of taxes:
  Unrealized gain (loss) on securities
    available for sale, net ....................     (451,257)        131,428
                                                   ----------      ----------
Comprehensive income ...........................   $  481,283       1,054,598
                                                   ----------      ----------
Net income per share of common stock
  Basic ........................................       $  .20             .18
  Diluted ......................................          .19             .18


See accompanying notes to consolidated financial statements.


                                      -2-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Three months ended September 30, 1999 and 1998
                                   (unaudited)


                                                          1999         1998
                                                      ------------  -----------
Cash flows from operating activities:
  Net Income ........................................ $    932,531      923,170
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Amortization of loan fees, premiums and
        discounts, net ..............................      (22,213)     (24,512)
      Provision for loan losses .....................       12,374       29,306
      Accretion of premiums (discounts) on
        investments securities and mortgage-backed
        securities, net .............................      (12,600)         666
      Depreciation ..................................       32,104       33,035
      Non-cash compensation under stock based
        benefit plans ...............................       39,262       71,418
      Decrease (increase) in accrued interest
        receivable on securities and loans receivable      (32,016)     237,781
      Increase in income taxes currently payable ....      467,116      465,179
      Increase in accrued expenses and other
        liabilities .................................       79,947       57,981
      Increase in unearned loan fees ................       38,047       20,542
      (Increase) decrease in prepaid expenses and
        other assets ................................      (20,192)       2,407
                                                      ------------  -----------
          Net cash provided by operating activities .    1,514,360    1,816,973
                                                      ------------  -----------

Cash flows from investing activities:
  Purchase of investment securities held to maturity    (1,700,000) (17,187,441)
  Maturity of investment securities held to maturity           -0-   17,200,000
  Maturity of securities available for sale .........          -0-    2,200,000
  Principal repayments of investment securities .....      160,522          -0-
  Loan disbursements, net of repayments .............  (11,710,352)  (3,955,160)
  Purchase of mortgage-backed securities ............     (400,000)         -0-
  Mortgage-backed securities held to maturity
    principal repayments ............................      903,126    1,608,538
  Purchases of property and equipment ...............      (82,745)     (36,924)
  Investment in life insurance policies .............      (62,475)     (72,684)
                                                      ------------  -----------
          Net cash used in investing activities ..... $(12,891,924)    (243,674)
                                                      ------------  -----------



                                      -3-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 Three months ended September 30, 1999 and 1998
                                   (unaudited)


                                                          1999         1998
                                                      ------------  -----------
Cash flows from financing activities:
  Net increase in savings accounts ..................    2,459,187    3,622,512
  Decrease in advance payments by borrowers for
    taxes, insurance and ground rents ...............   (3,907,301)  (3,812,924)
  Payment of dividends ..............................     (199,463)    (252,395)
  Purchase of treasury stock ........................     (744,615)    (546,620)
  Repayment of borrowed funds .......................      (14,813)         -0-
                                                      ------------  -----------
          Net cash used in financing activities .....   (2,407,005)    (989,427)
                                                      ------------  -----------
Net increase (decrease) in cash and cash equivalents   (13,784,569)     583,872

Cash and cash equivalents at beginning of period ....   33,010,666   36,857,469
                                                      ------------  -----------
Cash and cash equivalents at end of period .......... $ 19,226,097   37,441,341
                                                      ------------  -----------
Supplemental disclosure of cash flow information:

  Cash paid during the period for interest on
    deposits and other borrowings ...................    3,422,000    3,198,000

  Cash paid during the period for income taxes ......       31,000       49,000



See accompanying notes to consolidated financial statements.


                                      -4-

<PAGE>

                         LEEDS FEDERAL BANKSHARES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999
                                   (Unaudited)


(1)  Basis of Presentation

     The accompanying  consolidated financial statements include the accounts of
Leeds Federal Bankshares,  Inc.(the Company), its wholly owned subsidiary, Leeds
Federal Savings Bank and Leeds Investment Corporation, a wholly owned subsidiary
of Leeds Federal  Savings  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, 1999 Annual Report.  The results of operations for the
three months ended  September 30, 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)  Reclassification of Prior Year's Statements

     Certain amounts in the 1998 financial  statements have been reclassified to
conform to the 1999 presentation.


(3)  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>

                          LEEDS FEDERAL BANKSHARES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 1999
                            (Unaudited and continued)


<TABLE>
<CAPTION>
                                            Three Months            Three Months
                                        Ended September 30,     Ended September 30,
                                                1999                    1998
                                       ---------------------   ---------------------
                                         Basic      Diluted      Basic      Diluted
                                       ---------   ---------   ---------   ---------
<S>                                    <C>          <C>         <C>         <C>
Net Income ..........................  $ 932,540   $ 932,540   $ 923,170   $ 923,170

Dividends on unvested common stock
    awards ..........................         --          --      (2,016)       (933)
                                       ---------   ---------   ---------   ---------
Adjusted net income used in EPS
     calculations ...................  $ 932,540   $ 932,540   $ 921,154   $ 922,237
                                       ---------   ---------   ---------   ---------
Weighted average shares outstanding .  4,766,611   4,766,611   5,058,038   5,058,038

Effect of dilutive securities:
  Options ...........................         --      43,139          --      79,895
  Unvested common stock awards ......         --          --          --       7,739
                                       ---------   ---------   ---------   ---------
Adjusted weighted average shares used
  in EPS computation ................  4,766,611   4,809,750   5,058,038   5,145,672
                                       ---------   ---------   ---------   ---------
</TABLE>


                                      -6-

<PAGE>

                          LEEDS FEDERAL BANKSHARES INC
                    NOTES TO CONSOLIDATD FINANCIAL STATEMENTS
                               September 30, 1999
                            (Unaudited and continued)


(4)  Dividends on Common Stock

     On September 15, 1999,  the Company  declared a quarterly  cash dividend of
$.14 per share.  The  dividends  were  payable to  stockholders  of record as of
October 6, 1999 and were paid on October 20,  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  $210,000.  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 September 30, 1999, the cumulative amount of such
waived dividends was $8,243,400.


(5)  Impact of New Accounting Standards

     The  Financial   Accounting  Standards  Board  has  issued  SFAS  No.  133,
Accounting for Derivative Instruments and Hedging Activities,  as amended ( SFAS
No.  133).  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,  2000.  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  of SFAS  No.  133 is
encouraged,  but it may 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  adoption  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, 1999 to September 30, 1999
-----------------------------------------

     Cash on hand and due from banks,  interest bearing  deposits,  other liquid
investments,  investment  securities,  and  investment  in  FHLB  stock  totaled
approximately  $95.0 million,  a decrease of  approximately  $12.7  million,  or
11.8%, from June 30, 1999.  Mortgage-backed  securities  totaled $9.5 million, a
decrease of $500,000, due to repayments of principal,  offset by the purchase of
a mortgage-backed  security totaling  $400,000.  Loans receivable totaled $215.6
million,  an increase of $11.7 million,  or 5.7%,  reflecting  increased lending
activity.  The decreases in cash items and mortgage-backed  securities were used
primarily to fund the increase in loans receivable.

     Deposits  increased  approximately  $2.5  million,  to  $277.1  million  at
September  30, 1999.  Such increase was  primarily  attributable  to the general
market  interest  rate trends.  The Company has offered  savings  rates that are
competitive  with other banks.  However,  it has not relied on brokered funds or
negotiated jumbo certificates to maintain deposit levels.

     The Bank 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
September 30, 1999, the Bank had Tier 1 core capital of $45.8 million,  or 14.2%
of total adjusted  assets,  which was $32.8 million in excess of the requirement
of minimum core capital of $13.0 million, or 4% of total adjusted assets; Tier 1
risk based capital of $45.8 million, or 28.1% of risk weighted assets, which was
$39.3 million in excess of the  requirement of minimum Tier 1 risk based capital
of $6.5 million,  or 4% of risk weighted assets; and total risk-based capital of
$48.1  million,  or 29.5% of risk  weighted  assets,  which was $35.0 million in
excess of the  requirement of a minimum total  risk-based  capital of 8% of risk
weighted assets.


Comparison of Operating Results for Three Month
Periods Ended September 30, 1999 and 1998
-----------------------------------------------

General
-------

     The  Company's  net income for the three months ended  September  30, 1999,
totaled  $933,000,  an increase of $10,000,  compared to $923,000  for the three
months ended September 30, 1998.  Unrealized gains


                                      -8-
<PAGE>

(losses) on securities  available for sale  decreased  $583,000 to (451,000) for
the three months ended  September  30, 1999,  from $131,000 for the three months
ended  September 30, 1998.  The decrease was due to a decrease in the fair value
of the Company's investment  securities available for sale due to an increase in
interest rates during the quarter.  There were no other significant  differences
between the various  line items in the  Statements  of Income and  Comprehensive
Income for the two periods.


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

     Interest income on loans remained relatively  unchanged at $3.7 million for
the three months ended September 30, 1999, and 1998, respectively. Total average
loans increased $17.5 million to $210.2 million for the current quarter compared
to $192.7  for the same  quarter  last  year.  The  increase  in  average  loans
reflected  increased loan demand.  Funds principally from an increase in average
saving deposits and a decrease in  mortgage-backed  securities were used to fund
the increase in average loans.  Yield on average loans decreased to 7.1% for the
three months ended  September 30, 1999, from 7.7% for the same period last year.
The  decrease  in  yield  on  average  loans  was  principally  due to new  loan
originations  at lower yields.  Interest  income on  mortgage-backed  securities
decreased  by  $114,000  due  principally  to a decrease  in average  balance of
mortgage-backed  securities  to $9.8  million  from  $15.7  million in the first
quarter of 1998. Average yield on mortgage-backed  securities decreased to 6.7%,
from 7.1%. The decreases in average  balance of  mortgage-backed  securities was
attributable to principal repayments.

     Interest  income  on  investment  securities  and  short-term   investments
("Investments")  increased  $277,000 to $1.6  million for the three months ended
September 30, 1999,  from $1.3 million for the three months ended  September 30,
1998.  The average  balance of  Investments  increased to $101.3 million for the
three months ended  September 30, 1999, from $84.4 million for the prior period.
Average  yield of  Investments  increased  slightly to 6.2%,  from 6.1%,  due to
changes in market rates on short term investments.

     Total interest  expense  increased by  approximately  $224,000,  during the
quarter  ended  September  30, 1999 to $3.4  million  from $3.2  million for the
quarter ended September 30, 1998. This increase was the result of an increase in
average  balance of  interest-bearing  liabilities to $276.9 million from $247.6
million,  partially offset by a decrease in the average rate paid on deposits to
4.9% from  5.2%.  The  increase  in the  average  balances  of  interest-bearing
liabilities  and the  decrease  in rate  paid was a  result  of  general  market
conditions.

     As a result of the  foregoing  changes,  interest  expense  increased  by a
greater  amount as compared to interest  income  resulting  in a decrease in net
interest  income of  $42,000,  to $2.0  million  during the three  months  ended
September  30, 1999,  as compared to $2.1 million  during the three months ended
September 30, 1998.


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

     The Company  provided  $12,000 for loan losses for the three  months  ended
September 30, 1999, and $29,000 during the three months ended September 30,1998.
The  allowance  for loan losses,  which was $738,000 at September  30, 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 credit  losses;  including  changes in economic and business
conditions and developments,  changes in the nature and volume of the portfolio,
trends  in the  level  of past  due and  classified  loans,  and the  status  of
nonperforming  loans. Based on management's  review and analysis,  the allowance
for loan losses as of September 30, 1999, is considered adequate.


                                      -9-

<PAGE>

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

     Noninterest income decreased by approximately $7,000 to $100,000 during the
three months ended  September 30, 1999, as compared to $107,000 during the three
months ended  September  30, 1998.  The  decrease  was  primarily  the result of
decreases in income from life insurance contracts.


Noninterest Expense
-------------------

     Noninterest  expense  for  the  three  months  ended  September  30,  1999,
decreased by  approximately  $26,000,  to $684,000  compared to $710,000 for the
three months ended  September  30, 1998.  Such  decrease was due to decreases in
compensation and employee benefits, principally reduced Employee Stock Ownership
Plan costs,  and other  expenses,  partially  offset by an increase in occupancy
expenses.


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

     The  effective  income tax rate for the three  months ended  September  30,
1999,  was 34.8%,  compared to 35.8% for the three  months ended  September  30,
1998. The decrease was due to lower state taxes.


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

     Loans  which were 90 or more days  delinquent  but still  accruing  totaled
$1,000 at September 30, 1999, and $7,000 at June 30, 1999. Loans 90 or more days
delinquent and not accruing totaled $2.5 million at September 30, 1999, and $2.7
million at June 30,  1999.  As of  September  30,  1999,  the Company had a $2.5
million loan which matured in June 1998, and has not been repaid. Management has
obtained a current  appraisal,  and based in part on such appraisal,  management
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
Office of Thrift Supervision  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 39.10% during the quarter ended September
30, 1999, and equaled 36.47% at September 30, 1999.


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

     The following  information  constitutes a "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.  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 ("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 Company  will  prepare for January 1, 2000.  The
Project Team, with the strong support and involvement of senior


                                      -10-
<PAGE>

management,  developed  an Action Plan  comprised  of five  phases;  assessment,
evaluation,   renovation,   validation  and  implementation.   The  Company  has
substantially  completed  all of the five phases for its internal  systems.  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.  Company  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 January 1, 2000.  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 550,000 Shares of Common Stock
------------------------------------------------------------------------

     As of September  30, 1999,  the Company has  repurchased a total of 397,256
shares of the 475,000 that were  authorized  in connection  with its  repurchase
plan.  The Board of Directors has  announced  that the Company plans to continue
the  repurchase of up to an additional  550,000 shares over the next year as, in
the opinion of  management,  market  conditions  warrant,  and if and when Leeds
Federal  Savings Bank receives OTS approval of its application to pay sufficient
cash to the Company to fund the repurchase plan.


                                      -11-

<PAGE>

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


Legal Proceedings
-----------------

     The  Company  is not  involved  in any  litigation,  or is it  aware of any
pending  litigation,  other than legal  proceedings  incidental to the Company's
business.  In the opinion of  management,  no material loss is expected from any
such pending 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 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:                , 1999            By: /s/ Gordon E. Clark
      ---------------------                -------------------------------------
                                           Gordon E. Clark
                                           President and Chief Executive Officer



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







                                      -13-