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

                                  FORM 10-Q

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

                    For the quarter ended March 31, 1999

                                     OR

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

          For the transition period from             To            
                                         -----------    -----------

                       Commission file number 0-23533

                           MYSTIC FINANCIAL, INC.
           (Exact name of registrant as specified in its charter)

DELAWARE                                              04-3401049
--------                                              ----------
(State or other jurisdiction                          I.R.S. Employer
of incorporation or organization)                     Identification No.)

60 HIGH STREET
MEDFORD, MASSACHUSETTS                                02155
----------------------                                -----
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code    (781) 395-2800
                                                      --------------

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

      YES   X                   NO
           ----                      ----

As of April 30, 1999, 2,573,555 shares of the registrant's common stock were 
outstanding 

                    MYSTIC FINANCIAL, INC. AND SUBSIDIARY

                                    INDEX

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

Item 1     Financial Statements:

           Consolidated Balance Sheets - March 31, 1999
            and June 30, 1998                                             1

           Consolidated Statements of Income - Three and Nine Months
            Months Ended March 31, 1999 and 1998                          2

           Consolidated Statement of Changes in Stockholders'
            Equity-Nine Months Ended March 31, 1999                       3
            and 1998                        

           Consolidated Statements of Cash Flows - Nine Months
            Ended March 31, 1999 and 1998                                 4

           Notes to Unaudited Consolidated Financial Statements -
            March 31, 1999                                                5

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

Item 3     Quantitative and Qualitative Disclosures About
            Market Risk                                                  25

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

Item 4     Submission of Matters to a Vote of Security Holders           25

Item 6     Exhibits and Reports on Form 8-K                              25

           SIGNATURES                                                    26
           ----------

                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
                        Item 1 - Financial Statements
                         Consolidated Balance Sheets
                               (In Thousands)

<TABLE>
<CAPTION>
                                                                   March 31, 1999    June 30, 1998
                                                                   --------------    -------------
                                                                             (Unaudited)

<S>                                                                   <C>              <C>
Assets
  Cash and due from banks                                             $  6,458         $  7,626
  Federal funds sold                                                     9,849           16,773
  Short-term investments                                                10,328            1,580
                                                                      -------------------------
      Total cash and cash equivalents                                   26,635           25,979

  Securities available for sale, at fair value                          24,247           14,749
  Securities held to maturity, at amortized cost                         3,501           12,006
  Federal Home Loan Bank stock, at cost                                  1,080              997
  Loans, net of allowance for loan losses of $1,308 and $1,236,
   respectively                                                        149,740          138,593
  Mortgage loans held for sale                                             314               80
  Bank premises and equipment, net                                       2,728            2,559
  Real estate held for investment, net                                   1,743            1,785
  Accrued interest receivable                                            1,196            1,099
  Due from Co-operative Central Bank                                       929              929
  Other assets                                                             136              273
                                                                      -------------------------
                                                                      $212,249         $199,049
                                                                      =========================
Liabilities and Stockholders' Equity
  Deposits                                                            $155,485         $144,766
  Federal Home Loan Bank borrowings                                     20,085           16,505
  Mortgagors' escrow accounts                                              637              481
  Accrued interest payable                                                 357              288
  Accrued expenses and other liabilities                                   105              882
                                                                      -------------------------
      Total liabilities                                                176,669          162,922
                                                                      -------------------------
Stockholders' equity:
  Preferred stock, $.01 par value, 1,000,000  shares authorized
   none issued                                                               -                -
  Common stock $.01 par value, 5,000,000 shares authorized,
   2,711,125 shares issued                                                  27               27
  Additional paid-in capital                                            25,710           25,710
   Retained earnings                                                    13,998           13,173
                                                                      -------------------------
                                                                        39,735           38,910
  Treasury stock, at cost - 137,570 and 2,120 shares at
   March 31, 1999 and June 30, 1998, respectively                       (1,988)             (21)
  Accumulated other comprehensive income                                   628              432
  Unearned compensation - ESOP                                          (2,795)          (3,194)
                                                                      --------------------------
      Total stockholders' equity                                        35,580           36,127
                                                                      -------------------------
                                                                      $212,249         $199,049
                                                                      =========================
</TABLE>


    See accompanying notes to unaudited consolidated financial statements.

                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
                        Item 1 - Financial Statements
                      Consolidated Statements of Income
                   (In Thousands, Except Per Share Data )

<TABLE>
<CAPTION>
                                                           Three Months Ended     Nine Months Ended
                                                          --------------------    ------------------
                                                            March       March       March      March
                                                          31, 1999    31, 1998    31,1999    31,1998
                                                          --------    --------    -------    -------
                                                                         (Unaudited)

<S>                                                        <C>         <C>        <C>        <C>
Interest and dividend income:
  Interest and fees on loans                               $2,845      $2,574     $ 8,429    $7,460
  Interest and dividends on investment securities             332         288         974       858
  Other interest                                              333         309         780       575
                                                           ----------------------------------------
      Total interest and dividend income                    3,510       3,171      10,183     8,893

Interest expense:
  Deposits                                                  1,317       1,223       3,765     3,711
  Federal Home Loan Bank borrowings                           292         167         822       502
                                                           ----------------------------------------
      Total interest expense                                1,609       1,390       4,587     4,213
                                                           ----------------------------------------

  Net interest income                                       1,901       1,781       5,596     4,680
  Provision for loan losses                                     -          65          90       215
                                                           ----------------------------------------
  Net interest income, after provision for loan losses      1,901       1,716       5,506     4,465
                                                           ----------------------------------------

Other income:

  Customer service fees                                       127         128         396       390
  Gain on sales of mortgage loans                               9          12          98        35
  Gain on sales of securities available for sale, net          39          46         100       184
  Co-operative Central Bank Share Insurance
   Fund Special Dividend                                        -           -          51        49
  Miscellaneous                                                59          66         152       142
                                                           ----------------------------------------
      Total other income                                      234         252         797       800
                                                           ----------------------------------------

Operating expenses:

  Salaries and employee benefits                              861         743       2,507     2,165
  Occupancy and equipment expenses                            194         120         427       366
  Data processing expenses                                     91          66         240       190
  Other general and administrative expenses                   358         264       1,132       775
                                                           ----------------------------------------
      Total operating expenses                              1,504       1,193       4,306     3,496
                                                           ----------------------------------------
  Income before income taxes                                  631         775       1,997      1769
  Provision for income taxes                                  237         308         779       711
                                                           ----------------------------------------

  Net income                                               $  394      $  467     $ 1,218    $1,058
                                                           ========================================
Earnings per share - basic and diluted                     $  .17         N/A     $   .51       N/A
                                                           =======                =======          
  Weighted average shares outstanding                       2,380         N/A       2,393       N/A
                                                           ======                 =======          
</TABLE>


    See accompanying notes to unaudited consolidated financial statements.

                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
                        Item 1 - Financial Statements
         Consolidated Statements of Changes in Stockholders' Equity
                  Nine Months Ended March 31, 1999 and 1998
                               (In Thousands)

<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                  Additional                             Other         Unearned         Total
                         Comprehensive   Common    Paid-in     Retained   Treasury   Comprehensive   Compensation   Stockholders'
                            Income       Stock     Capital     Earnings    Stock        Income           ESOP          Equity
                         -------------   ------   ----------   --------   --------   -------------   ------------   -------------
                                                   (Unaudited)

<S>                         <C>           <C>      <C>         <C>        <C>             <C>          <C>             <C>
Balance at
 June 30, 1998                            $27      $25,710     $13,173    $   (21)        $432         $(3,194)        $36,127

Net income                  $1,218          -            -       1,218          -            -               -           1,218
Change in net
 Unrealized gain on
 Securities available
 for sale, net of tax
 effects                       196          -            -           -          -          196               -             196
                            ------
  Comprehensive income      $1,414
                            ======

Dividend paid
 ($.15 per share).                          -            -        (393)         -            -               -            (393)

Purchase of treasury
 stock                                      -            -           -     (1,967)           -               -          (1,967)
Decrease in unearned
 compensation - ESOP                        -            -           -          -            -             399             399
                                          ------------------------------------------------------------------------------------
Balance at 
 March 31, 1999                           $27      $25,710     $13,998    $(1,988)        $628         $(2,795)        $35,580
                                          ====================================================================================

Balance at 
 June 30, 1997                            $ -      $     -     $11,761    $     -         $179         $     -         $11,940

Net income                  $1,058          -            -       1,058                                                   1,058
Change in net 
 unrealized gain on 
 securities available
 for sale, net of tax
 effects                       233          -            -           -          -          233               -             233
                            ------
Comprehensive income        $1,291
                            ======
Net proceeds from sale
 of common stock                           27       25,733           -          -            -               -          25,760
Increase in unearned
 compensation - ESOP                        -            -           -          -            -          (3,194)         (3,194)
                                          ------------------------------------------------------------------------------------
Balance at 
 March 31, 1998                           $27      $25,733     $12,819    $     -         $412         $(3,194)        $35,797
                                          ====================================================================================
</TABLE>


    See accompanying notes to unaudited consolidated financial statements

                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
                        Item 1 - Financial Statements
                    Consolidated Statements of Cash Flows
                               (In Thousands)

<TABLE>
<CAPTION>
                                                        Nine Months        Nine Months 
                                                           Ended              Ended
                                                       March 31, 1999     March 31, 1998
                                                       --------------     --------------
                                                                  (Unaudited)

<S>                                                       <C>                <C>
Cash flows from operating activities:
  Net income                                              $  1,218           $  1,058
  Adjustments to reconcile net income to net cash 
   provided by operating activities:
    Provision for loan losses                                   90                215
    Net amortization of securities                             (32)                 -
    Gain on sales of securities available for sale            (100)              (184)
    Gain on sale of loans                                      (89)                 -
    Amortization of unearned compensation - ESOP               399                  -
    Depreciation expense                                       255                251
    Net change in mortgage loans held for sale                (234)               (50)
    (Increase) in accrued interest receivable                  (97)              (159)
    Decrease in other assets                                   137                 50
    Increase (decrease) in accrued expenses and
     other liabilities                                        (814)               228
                                                          ---------------------------
      Net cash provided by operating
       activities                                              733              1,409
                                                          ---------------------------

Cash flows from investing activities:
  Maturities of securities held to maturity                  8,500              5,001
  Purchase of securities held to maturity                        -             (1,503)
  Sales of securities available for sale                     3,725              5,390
  Maturity of securities available for sale                    500                  -
  Purchase of securities available for sale                (13,284)           (13,155)
  Purchase of Federal Home Loan Bank Stock                     (83)              (139)
  Loans originated, net of payments received               (18,968)           (16,287)
  Proceeds from sale of loans                                7,820                  -
  Purchases of banking premises and equipment                 (382)              (110)
                                                          ---------------------------
      Net cash used by investing activities                (12,172)           (20,803)
                                                          ---------------------------

Cash flows from financing activities:
  Net increase in deposits                                  10,719              7,925
  Proceeds from borrowings                                   3,600             27,055
  Repayment of borrowings                                      (20)           (21,076)
  Net increase in mortgagors' escrow accounts                  156                146
  Purchase of ESOP stock                                         -             (3,194)
  Dividends paid                                              (393)                 -
  Purchase of treasury stock                                (1,967)                 -
  Proceeds from sale of common stock                             -             25,760
                                                          ---------------------------
      Net cash provided by financing activities             12,095             36,616
                                                          ---------------------------
Net change in cash and cash equivalents                        656             17,222

Cash and cash equivalents at beginning of period            25,979              6,225
                                                          ---------------------------
Cash and cash equivalents at end of period                $ 26,635           $ 23,447
                                                          ===========================
Supplemental cash flow information:
  Interest paid                                           $  4,526           $  4,182
  Income taxes paid                                          1,032                659
</TABLE>


    See accompanying notes to unaudited consolidated financial statements.


                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
                        Item 1 - Financial Statements
            Notes to Unaudited Consolidated Financial Statements
                               March 31, 1999

1)  Basis of Presentation and Consolidation

The unaudited consolidated interim financial statements of Mystic Financial, 
Inc. and subsidiary ("Mystic" or the "Company") presented herein should be 
read in conjunction with the consolidated financial statements for the year 
ended June 30, 1998, included in the Annual Report on Form 10-K of Mystic 
Financial, Inc., the holding company for Medford Co-operative Bank (the 
"Bank").   The operating results for the period ended March 31, 1999 are 
those of the Bank and Company.  Mystic had not issued any stock and had not 
conducted any business other than that of an organizational nature until 
January 8, 1998 when Mystic became the Bank's holding company in connection 
with the Bank's conversion from mutual to stock form.  Operating results 
prior to January 8, 1998 include only the Bank and not the Company.

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

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

2)  Commitments and Contingencies

At March 31, 1999, the Bank had outstanding commitments to originate loans 
amounting to approximately $7.6 million, and unadvanced funds on 
construction loans and lines of credit amounting to approximately $1.0 and 
$7.8 million, respectively.

3)  Stock Conversion

The Bank is a Massachusetts chartered stock co-operative bank founded in 
1886.  The Bank converted from a mutual institution on January 8, 1998.  
Mystic Financial, Inc. ("Mystic" or the "Company") has been organized at the 
direction of the Board of Directors of the Bank and has acquired all of the 
capital stock of the Bank.  The simultaneous conversion of the Bank to stock 
form, the issuance of the Bank's stock to the Company and the offer and sale 
of the common stock by the Company are herein referred to as the 
"Conversion."

The Company issued 2,711,125 shares at an initial offering price of $10.00 
per share on January 8, 1998 raising gross proceeds of  $27,111,250 and 
began trading on the Nasdaq National Market under the symbol "MYST" on 
January 9, 1998.  Net proceeds of the initial offering were approximately 
$25.7 million.  On January 8, 1998, the Company loaned approximately $3.2 
million to the Company's Employee Stock Ownership Plan (the "ESOP") to fund 
its purchase of 216,890 shares of common stock of the Company in open-market 
purchases following completion of the Conversion.

4)  Earnings Per Share

Earnings per share for the three and nine months ended March 31, 1999 were 
$.17 and $.51, respectively, on a basic and diluted basis. Earnings per 
share data is not presented for the three and nine months ended March 31, 
1998 since there were no outstanding shares of common stock until the 
Conversion on January 8, 1998. In calculating earnings per share, the number 
of shares of common stock outstanding is reduced by the number of shares 
held by the ESOP that have not been allocated or are not committed to be 
released to participants' individual accounts.

5)  Book Value Per Share

Book value per share was $14.93 as of March 31, 1999.  In calculating book 
value per share, the number of shares of common stock outstanding is reduced 
by the number of shares held by the ESOP that have not been allocated or are 
not committed to be released to participants' individual accounts.  There 
were 2,383,473 shares of common stock outstanding as of March 31, 1999 for 
purposes of calculating the Company's book value per share.

6)  Stock Repurchase Programs

On July 30, 1998, the Company's Board of Directors adopted a stock 
repurchase program authorizing the Company to repurchase up to 135,450 or 5% 
of its outstanding shares of common stock.  On August 6, 1998, the Company 
completed the repurchase program acquiring 135,450 shares at a cost of 
approximately $1,967,000.  On April 14,1999, the Company's Board of 
Directors approved a second stock repurchase program.  The Company intends 
to repurchase up to 128,677 shares or 5% of its outstanding common stock.

7)  1999 Stock Option Plan

On March 24, 1999, the stockholders approved the Mystic Financial, Inc. 1999 
Stock Option Plan (the "Option Plan") that the Company had adopted.  The 
purpose of the Option Plan is to enable the Company to grant certain 
officers, employees and outside directors a right, known as an option 
("Option"), to purchase shares of the Common Stock of the Company at a 
stated price during a specified period or term.  The Option Plan must be 
approved by the Commissioner of Banks of the Commonwealth of Massachusetts 
to be effective.  As of May 14, 1999, the Commissioner of Banks has not yet 
approved the Option Plan. Until such approval is obtained, the Option Plan 
will not become effective.  The Company has reserved a total of 257,355 
shares of Common Stock for use under the Option Plan.

8)  1999 Recognition and Retention Plan

On March 24, 1999, the stockholders approved the Mystic Financial, Inc. 1999 
Recognition and Retention Plan (the "RRP") that the Company had adopted.  
The RRP allows the Company to grant restricted stock awards ("Awards") to 
certain officers, employees and outside directors.   A "restricted stock 
award" constitutes a right to receive a certain number of shares of Common 
Stock upon the Award holder's satisfaction of certain requirements, such as 
completion of five years of service with the Company.  As a general rule, if 
the Award holder fails to fulfill the requirements contained in the 
restricted stock award, it will not vest.  Instead, the Award will be 
forfeited and canceled.  The RRP must be approved by the Commissioner of 
Banks of the Commonwealth of Massachusetts to be effective.  As of May 14, 
1999, the Commissioner of Banks has not yet approved the RRP. Until such 
approval is obtained, the RRP will not become effective.  The Company will 
establish a trust ("Trust") and will contribute, or cause to be contributed, 
to the Trust, from time to time, such amounts of money or property as the 
Board may determine, in its discretion.  A trustee will be appointed by the 
Company and will not be authorized to purchase more than 102,942 shares of 
Common Stock for the RRP.

9)  Recent Accounting Pronouncement

In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income," 
effective for fiscal years beginning after December 15, 1997.  Accounting 
principles generally require that recognized revenue, expenses, gains and 
losses be included in net income.  Certain FASB statements, however, require 
entities to report specific changes in assets and liabilities, such as 
unrealized gains and losses on available-for-sale securities, as a separate 
component of the equity section of the consolidated balance sheet.  Such 
items, along with net income, are components of comprehensive income.  SFAS 
No. 130 requires that all items of comprehensive income be reported in a 
financial statement that is displayed with the same prominence as other 
financial statements.  Additionally, SFAS No. 130 requires that the 
accumulated balance of other comprehensive income be displayed separately 
from retained earnings and additional paid-in capital in the equity section 
of the consolidated balance sheet.  The Company adopted these disclosure 
requirements in the quarter ending September 30, 1998.

10)  Investment Securities

The following table sets forth the Company's investment securities at the 
dates indicated.

<TABLE>
<CAPTION>
                                      March 31, 1999             June 30, 1998
                                   ---------------------     ---------------------
                                   Amortized      Fair       Amortized      Fair
                                     Cost         Value        Cost         Value
                                   ---------      -----      ---------      -----
                                                   (In Thousands)

<S>                                 <C>          <C>          <C>          <C>
Securities Available for Sale:
  U.S. Government & Federal
   Agency Obligations               $20,868      $20,803      $11,540      $11,527
  Marketable equity securities        2,412        3,444        2,544        3,222
                                    ----------------------------------------------
      Total                         $23,280      $24,247      $14,084      $14,749
                                    ==============================================

Securities held to maturity:
  U.S. Government & Federal
   Agency Obligations               $ 1,500      $ 1,504      $ 9,498      $ 9,510
  Other bonds & obligations           2,001        2,007        2,508        2,520
                                    ----------------------------------------------
      Total                         $ 3,501      $ 3,511      $12,006      $12,030
                                    ==============================================
</TABLE>

11)  Loans

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

<TABLE>
<CAPTION>
                                       March 31, 1999            June 30, 1998
                                     --------------------     --------------------
                                      Amount      Percent      Amount      Percent
                                      ------      -------      ------      -------
                                                (Dollars in Thousands)

<S>                                  <C>          <C>         <C>          <C>
Residential mortgage loans           $108,193      72.3%      $106,412      76.8%
Commercial real estate loans           31,786      21.2         24,475      17.7
Commercial loans                        5,405       3.6          4,579       3.3
Consumer loans                          1,619       1.1          1,787       1.3
Home equity loans                       1,804       1.2          1,716       1.2
Construction loans                      3,310       2.2          1,260       0.9
                                     -------------------------------------------
Total loans                           152,117     101.6        140,229     101.2

Less: 
  Deferred loan origination fees           36         -             17         -
  Unadvanced principal                  1,033       0.7            383       0.3
  Allowance for loan
   losses                               1,308       0.9          1,236       0.9
                                     -------------------------------------------
                                     $149,740     100.0%      $138,593     100.0%
                                     ===========================================
</TABLE>


12)  Allowance for Loan Losses

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

<TABLE>
<CAPTION>
                                                              Nine               Nine
                                                          Months Ended       Months Ended
                                                         March 31, 1999     March 31, 1998
                                                         --------------     --------------
                                                              (Dollars in Thousands)

<S>                                                         <C>                <C>
  Average loans, net                                        $142,526           $121,752
                                                            ===========================
  Period-end net loans                                      $149,740           $130,640
                                                            ===========================

  Allowance for loan losses at beginning of period          $  1,236           $    977
  Provision for loan losses                                       90                215
  Plus recoveries                                                  2                 14
  Loans charged-off                                              (20)                (2)
                                                            ---------------------------
  Allowance for loan losses at end of period                $  1,308           $  1,204
                                                            ===========================

  Non-performing loans                                      $    151           $    473
                                                            ===========================

Ratios:
  Allowance for loan losses to period end net loans             0.87%              0.91%
  Allowance for loan losses to non-performing loans           866.23%            254.55%
  Net charge-offs (recoveries) to average loans, net            0.02%             (0.01)%
</TABLE>


13)  Deposits and Borrowed Funds

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

<TABLE>
<CAPTION>
                                                         March 31, 1999           June 30, 1998
                                                      --------------------     --------------------
                                                       Amount      Percent      Amount      Percent
                                                       ------      -------      ------      -------
                                                                 (Dollars in Thousands)

<S>                                                   <C>          <C>         <C>          <C>
Deposits:
  Savings deposits                                    $ 40,305      25.9%      $ 40,460      28.0%
  NOW accounts                                          24,685      15.9         34,208      23.6
  Money market deposits                                  6,827       4.4          6,256       4.3
  Demand deposits                                        8,970       5.8          6,603       4.6
  Certificates of deposits                              74,698      48.0         57,239      39.5
                                                      -------------------------------------------
      Total deposits                                  $155,485     100.0%      $144,766     100.0%
                                                      ===========================================

Borrowed Funds:
  Advances from Federal Home Loan Bank of Boston:
    Maturities less than one year                     $  2,400      11.9%      $  1,125       6.8%
   Maturities greater than one year                     17,685      88.1         15,380      93.2
                                                      -------------------------------------------
      Total borrowed funds                            $ 20,085     100.0%      $ 16,505     100.0%
                                                      ===========================================
</TABLE>

                    Mystic Financial, Inc. and Subsidiary
                       Part I - Financial Information
    Item 2 - Management's Discussion and Analysis of Financial Condition
                          And Results of Operations
                               March 31, 1999

General

      Medford Co-operative Bank (the "Bank") completed its conversion from a 
mutual to a stock institution and was simultaneously acquired by Mystic 
Financial, Inc. ("Mystic" or the "Company") on January 8, 1998.  The 
following discussion and analysis should be read in conjunction with the 
consolidated financial statements and related notes thereto included within 
this report.

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

      The Company's profitability depends primarily on its net interest 
income, which is the difference between the interest income it earns on its 
loans and investment portfolio and its cost of funds, which consists mainly 
of interest paid on deposits and on borrowings from the Federal Home Loan 
Bank of Boston.  Net interest income is affected by the relative amounts of 
interest-earning assets and interest-bearing liabilities and the interest 
rates earned or paid on these balances.  When interest-earning assets 
approximate or exceed interest-bearing liabilities, any positive interest 
rate spread will generate net interest income.

      The Company's profitability is also affected by the level of other 
income and operating expenses.  Other income consists primarily of service 
fees, loan servicing and other loan fees, and gains on sales of investment 
securities available for sale.  Operating expenses consist of salaries and 
benefits, occupancy related expenses, and other general operating expenses.

      The operations of the Company, and banking institutions in general, 
are significantly influenced by general economic conditions and related 
monetary and fiscal policies of the financial institution's regulatory 
agencies.  Deposit flows and the cost of funds are influenced by interest 
rates on competing investments and general market rates of interest.  
Lending activities are affected by the demand for real estate financing and 
other types of loans, which in turn are affected by the interest rates at 
which such financing may be offered and other factors affecting loan demand 
and the availability of funds.

      In addition to those factors previously disclosed by the Company and 
Bank and those factors identified elsewhere herein, the following factors 
could cause actual results to differ materially from such forward-looking 
statements:  continued pricing pressures on loan and deposit products, 
actions of competitors, changes in economic conditions, the extent and 
timing of actions of the Federal Reserve Board, customer disintermediation, 
customers' acceptance of the Bank's products and services, the extent and 
timing of legislative and regulatory actions and reforms, and the ability of 
the Company and Bank to effectively deploy the capital it raised in its 
initial offering.

Average Balances, Interest and Average Yields

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

                    MYSTIC FINANCIAL, INC. AND SUBSIDIARY
                AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS
                 THREE MONTHS ENDED MARCH 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                       Three Months Ended March 31, 1999    Three Months Ended March 31, 1998
                                                       ----------------------------------   ----------------------------------
                                                       Average       Interest      Yield/   Average       Interest      Yield/
                                                       Balance    Income/Expense   Rate     Balance    Income/Expense   Rate
                                                       -------    --------------   ------   -------    --------------   ------
                                                                               (Dollars in Thousands)

<S>                                                    <C>            <C>          <C>      <C>            <C>          <C>
INTEREST-EARNING ASSETS:
  Total loans, net                                     $145,760       $2,845       7.81%    $126,501       $2,574       8.14%
  Investments                                            23,686          332       5.61%      21,114          288       5.46%
  Other earning assets                                   28,078          333       4.74%      24,703          309       5.00%
                                                       ---------------------                ---------------------
    Total interest-earning assets                       197,524        3,510       7.11%     172,318        3,171       7.36%
                                                                      ------                               ------
  Cash and due from banks                                 4,097                                2,492
  Other assets                                            6,632                                6,421
                                                       --------                             --------
    Total assets                                       $208,253                             $181,231
                                                       ========                             ========

INTEREST-BEARING LIABILITIES:
  Regular and other deposits                           $ 40,062          232       2.32%    $ 44,669          310       2.78%
  Now accounts                                           23,368           93       1.59%      22,968           89       1.55%
  Money market deposits                                   7,074           43       2.43%       6,795           45       2.65%
  Certificates of deposit                                73,593          949       5.16%      57,381          779       5.43%
                                                       ---------------------                ---------------------
    Total interest-bearing deposits                     144,097        1,317       3.66%     131,813        1,223       3.71%

FHLB borrowings                                          20,090          292       5.81%      10,969          167       6.09%
                                                       ---------------------                ---------------------
    Total interest-bearing liabilities                  164,187        1,609       3.92%     142,782        1,390       3.89%
                                                                      ------                               ------
Demand deposit accounts                                   7,643                                5,711
Other liabilities                                         1,041                                2,841
                                                       --------                             --------
    Total liabilities                                   172,871                              151,334

Stockholders' equity                                     35,382                               29,897
                                                       --------                             --------

    Total liabilities and stockholders' equity         $208,253                             $181,231
                                                       ========                             ========

Net interest income                                                   $1,901                               $1,781
                                                                      ======                               ======

Interest rate spread                                                               3.19%                                3.47%

Net interest margin                                                                3.85%                                4.13%

Interest earning assets/interest-bearing liabilities                             1.20x                                  1.21x
</TABLE>


                    MYSTIC FINANCIAL, INC. AND SUBSIDIARY
                AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS
                  NINE MONTHS ENDED MARCH 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                        Nine Months Ended March 31, 1999     Nine Months Ended March 31, 1998
                                                       ----------------------------------   ----------------------------------
                                                       Average       Interest      Yield/   Average       Interest      Yield/
                                                       Balance    Income/Expense   Rate     Balance    Income/Expense   Rate
                                                       -------    --------------   ------   -------    --------------   ------
                                                                               (Dollars in Thousands)

<S>                                                    <C>           <C>           <C>      <C>            <C>          <C>
INTEREST-EARNING ASSETS:
  Total loans, net                                     $142,526      $ 8,429       7.89%    $121,752       $7,460       8.17%
  Investments                                            23,479          974       5.53%      20,554          858       5.57%
  Other earning assets                                   21,154          780       4.92%      14,708          575       5.21%
                                                       ---------------------                ---------------------
    Total interest-earning assets                       187,159       10,183       7.25%     157,014        8,893       7.55%
                                                                     -------                               ------
  Cash and due from banks                                 3,877                                2,780
  Other assets                                            6,352                                6,135
                                                       --------                             --------
    Total assets                                       $197,388                             $165,929
                                                       ========                             ========

INTEREST-BEARING LIABILITIES:
  Regular and other deposits                           $ 40,629          757       2.48%    $ 44,100          847       2.56%
  Now accounts                                           23,212          277       1.59%      20,920          259       1.65%
  Money market deposits                                   6,642          125       2.51%       6,661          132       2.97%
  Certificates of deposit                                64,878        2,606       5.36%      58,249        2,473       5.66%
                                                       ---------------------                ---------------------
    Total interest-bearing deposits                     135,361        3,765       3.71%     129,930        3,711       3.81%
FHLB borrowings                                          18,438          822       5.94%      10,797          502       6.20%
                                                       ---------------------                ---------------------
    Total interest-bearing liabilities                  153,799        4,587       3.98%     140,727        4,213       3.99%
                                                                     -------                               ------
Demand deposit accounts                                   7,302                                5,592
Other liabilities                                         1,121                                  398
                                                       --------                             --------
    Total liabilities                                   162,222                              146,717

Stockholders' equity                                     35,166                               19,212
                                                       --------                             --------
    Total liabilities and stockholders' equity         $197,388                             $165,929
                                                       ========                             ========

Net interest income                                                  $ 5,596                               $4,680
                                                                     =======                               ======

Interest rate spread                                                               3.27%                                3.56%

Net interest margin                                                                3.99%                                3.97%

Interest earning assets/interest-bearing liabilities                               1.22x                                1.12x
</TABLE>


Rate/Volume Analysis

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

<TABLE>
<CAPTION>
                                  Three Months Ended March 31,
                                         1999 vs 1998
                                      Increase (decrease)
                                  ----------------------------
                                       Due to
                                  -----------------
                                   Rate      Volume     Total
                                   ----      ------     -----
                                         (In Thousands)

<S>                               <C>         <C>       <C>
Interest and dividend income:
  Loans, net                      $(108)      $379      $271
  Investments                         8         36        44
  Other earning assets              (16)        40        24
                                  --------------------------
      Total                        (116)       455       339
                                  --------------------------

Interest expense:
  Deposits                          (18)       112        94
  Borrowed funds                     (8)       133       125
                                  --------------------------
      Total                         (26)       245       219
                                  --------------------------
Change in net interest income     $ (90)      $210      $120
                                  ==========================


<CAPTION>
                                   Nine Months Ended March 31,
                                         1999 vs 1998
                                      Increase (decrease)
                                   ---------------------------
                                       Due to
                                  -----------------
                                   Rate      Volume     Total
                                   ----      ------     -----
                                         (In Thousands)

<S>                               <C>        <C>        <C>
Interest and dividend income:
  Loans, net                      $(263)     $1,232     $  969
  Investments                        (6)        122        116
  Other earning assets              (34)        239        205
                                  ----------------------------
      Total                        (303)      1,593      1,290
                                  ----------------------------

Interest expense:
  Deposits                          (99)        153         54
  Borrowed funds                    (22)        342        320
                                  ----------------------------
      Total                        (121)        495        374
                                  ----------------------------
Change in net interest income     $(182)     $1,098     $  916
                                  ============================
</TABLE>


Financial Condition and Results of Operations

Comparison of Financial Condition at March 31, 1999 and June 30, 1998

      The Company's total assets amounted to $212.2 million at March 31, 
1999 compared to $199.0 million at June 30, 1998, an increase of $13.2 
million or 6.6%.  The increase in total assets is a result of an increase in 
cash and cash equivalents and continued loan growth.  The increase in total 
assets is principally due to an increase in deposit accounts and Federal 
Home Loan Bank borrowings.

      Cash and cash equivalents increased to $26.6 million at March 31, 1999 
from $26.0 million at June 30, 1998, an increase of $656,000 or 2.5%.  Cash 
and cash equivalents are volatile due to the Company's large deposit 
relationship with a law firm which maintains short-term deposits in real 
estate conveyancing accounts and has significant fluctuations in its deposit 
account balances.  Investment securities increased to $27.7 million at March 
31, 1999 from $26.8 million at June 30, 1998, an increase of $1.0 million or 
3.7%.  Cash and cash equivalents and investment securities have remained 
stable due to the Company's efforts to maintain liquidity and to improve its 
interest rate sensitivity.

      Net loans increased by $11.1 million or 8.0% to $149.7 million or 
70.6% of  total assets at March 31, 1999 as compared to $138.6 million or 
69.6% of total assets at June 30, 1998 as the Company continued its emphasis 
on originating and retaining residential mortgage loans and commercial and 
commercial real estate loans.

      Total deposits increased by $10.7 million or 7.4% to $155.5  million 
at March 31, 1999 from $144.8 million at June 30, 1998 as a result of an 
increase in certificates of deposit due to a promotion associated with the 
opening of a new branch office in late November 1998 in Lexington, 
Massachusetts, partially offset by a decrease in NOW accounts attributable 
to volatile balances in mortgage conveyancing escrow accounts maintained by 
law firms.

      Total borrowings increased by $3.6 million to $20.1 million at March 
31, 1999 from $16.5 million at June 30, 1998.  The Company's continued use 
of borrowed funds reflects additional funding used to fund larger commercial 
real estate loans, generally those exceeding $1.0 million, with matching 
funds from the Federal Home Loan Bank of Boston ("FHLBB") to reduce interest 
rate risk.  In addition, the Company  has match-funded $5.0 million of 30-
year fixed-rate residential mortgage loans held for portfolio.  The 
retention of these loans is helping the Company leverage the capital it 
raised in the conversion.

      Stockholders' equity decreased by $547,000 to $35.6 million at March 
31, 1999 from $36.1 million at June 30, 1998 as a result of the repurchase 
of 135,450 shares of common stock held in treasury at a cost of $2.0 million 
and dividends paid of $393,000, offset by net income of $1.2 million, a 
decrease in unearned compensation - ESOP of $399,000, and an increase in the 
net unrealized gain on securities available for sale of $196,000.


Comparison of the Operating Results for the Three and Nine Months Ended 
March 31, 1999 and 1998

      Net Income.  Net income was $394,000 and $1,218,000 for the three and 
nine months ended March 31, 1999, respectively, compared to $467,000 and 
$1,058,000 for the three and nine months ended March 31, 1998, respectively. 
 Return on average assets was .76% and .82% for the three and nine months 
ended March 31, 1999, respectively, compared to 1.03% and .85% for the three 
and nine months ended March 31, 1998, respectively.  Return on average 
equity was 4.45% and 4.62% for the three and nine months ended March 31, 
1999, respectively, compared to 6.25% and 7.34% for the three and nine 
months ended March 31, 1998, respectively. The decrease in the return on 
average assets for the three months ended March 31, 1999 compared to the 
same period a year ago was primarily due to higher operating expenses 
resulting from the opening of the new branch in Lexington, new employee 
benefit plans and the increased cost of operating as a public company. The 
decrease in the return on average equity for the three and nine months ended 
March 31, 1999 was primarily due to the additional capital from the 
Conversion.

      The decrease in net income for the three months ended March 31, 1999 
compared to the three months ended March 31, 1998 was attributable to an 
increase in net interest income of $120,000, a decrease of $65,000 in 
provision for loan losses, and a decrease in the provision for income taxes 
of $71,000, which were offset by a decrease in other income of $18,000, and 
an increase in operating expenses of $311,000. The increase in net income 
for the nine months ended March 31, 1999 compared to the nine months ended 
March 31, 1998 was attributable to an increase in net interest income of 
$916,000 and a decrease of $125,000 in provision for loan losses, which were 
partially offset by a decrease in other income of $3,000, an increase in 
operating expenses of $810,000, and an increase in the provision for income 
taxes of $68,000.

      Interest and Dividend Income.  Total interest and dividend income 
increased by $339,000 or 10.7% to $3.5 million for the three months ended 
March 31, 1999 from $3.2 million for the three months ended March 31, 1998. 
The increase in interest income was a result of a higher level of loans, 
investment securities, and other earning assets resulting from the 
deployment of proceeds of the Conversion and general asset growth.  The 
average balance of net loans for the three months ended March 31, 1999 was 
$145.8  million compared to $126.5 million for the three months ended March 
31, 1998.  The average yield on net loans was 7.81% for the three months 
ended March 31, 1999 compared to 8.14% for the three months ended March 31, 
1998.

      The average balance of investment securities for the three months 
ended March 31, 1999 was $23.7 million compared to $21.1 million for the 
three months ended March 31, 1998.  The average yield on investment 
securities was 5.61% for the three months ended March 31, 1999 compared to 
5.46% for the three months ended March 31, 1998.   The average balance of 
other earning assets for the three months ended March 31, 1999 was $28.1 
million compared to $24.7 million for the three months ended March 31, 1998. 
The average yield on other earning assets was 4.74% for the three months 
ended March 31, 1999 compared to 5.00% for the three months ended March 31, 
1998.  The decrease in the average yield on net loans and other earning 
assets reflects the general decline in market interest rates since the prior 
period.

      Total interest and dividend income increased by $1.3 million or 14.5% 
to $10.2 million for the nine months ended March 31, 1999 from $8.9 million 
for the nine months ended March 31, 1998.  The increase in interest income 
was a result of a higher level of loans, investment securities, and other 
earning assets resulting from the deployment of proceeds of the Conversion 
and general asset growth.  The average balance of net loans for the nine 
months ended March 31, 1999 was $142.5 million compared to $121.8 million 
for the nine months ended March 31, 1998.  The average yield on net loans 
was 7.89% for the nine months ended March 31, 1999 compared to 8.17% for the 
nine  months ended March 31, 1998.

      The average balance of investment securities for the nine months ended 
March 31, 1999 was $23.5 million compared to $20.6 million for the nine 
months ended March 31, 1998.  The average yield on investment securities was 
5.53% for the nine months ended March 31, 1999 compared to 5.57% for the 
nine months ended March 31, 1998.   The average balance of other earning 
assets for the nine months ended March 31, 1999 was $21.2 million compared 
to $14.7   million for the nine months ended March 31, 1998.  The average 
yield on other earning assets was 4.92% for the nine months ended March 31, 
1999 compared to 5.21% for the nine months ended March 31, 1998.  The 
decrease in the average yield on net loans, investment securities, and other 
earning assets reflects the general decline in market interest rates since 
the prior period.

      Interest Expense.  Total interest expense increased by $219,000 or 
15.8% to $1.6 million for the three months ended March 31, 1999 from $1.4 
million for the three months ended March 31, 1998.  Interest expense 
increased primarily due to the increase in FHLBB borrowings.  The Company's 
continued use of borrowed funds reflects additional funding used to fund 
larger commercial real estate loans, generally those exceeding $1.0 million, 
with matching funds from the FHLBB to reduce interest rate risk.  In 
addition, the Company  has match-funded $5.0 million of 30-year fixed-rate 
residential mortgage loans held for portfolio with borrowings of various 
maturities.

      Average interest-bearing deposits increased by $12.3 million or 9.3% 
to $144.1 million while the average rate decreased five basis points to 
3.66% from 3.71% for the three months ended March 31, 1999.  Average 
borrowings increased by $9.1 million to $20.1 million for the three months 
ended March 31, 1999 from $11.0 million while the average rate decreased 26 
basis points to 5.81% from 6.09% for the three months ended March 31, 1998.

      Total interest expense increased by $374,000 or 8.9% to $4.6 million 
for the nine months ended March 31, 1999 from $4.2 million for the nine 
months ended March 31, 1998.  Interest expense increased primarily due to 
the increase in FHLBB borrowings.  The Company's continued use of borrowed 
funds reflects additional funding used to fund larger commercial real estate 
loans, generally those exceeding $1.0 million, with matching funds from the 
FHLBB to reduce interest rate risk.  In addition, the Company  has match-
funded $5.0 million of 30-year fixed-rate residential mortgage loans held 
for portfolio with borrowings of various maturities.

      Average interest-bearing deposits increased by $5.4 million or 4.2% to 
$135.4 million while the average rate decreased 10 basis points to 3.71% 
from 3.81% for the nine months ended March 31, 1999.  Average borrowings 
increased by $7.6 million to $18.4 million for the nine months ended March 
31, 1999 from $10.8 million while the average rate decreased 26 basis points 
to 5.94% from 6.20% for the nine months ended March 31, 1998.

      Net Interest Income.  Net interest income for the three months ended 
March 31, 1999 was $1.9 million as compared to $1.8 million for the three 
months ended March 31, 1998.  The $120,000 or 6.7% increase can be 
attributed to a combination of the $339,000  increase in interest and 
dividend income and the $219,000 increase in interest expense on deposits 
and borrowed funds.  The average yield on interest earning assets decreased 
25 basis points to 7.11% for the three months ended March 31, 1999 from 
7.36% for the three months ended March 31, 1998, while the average cost on 
interest-bearing liabilities increased by three basis points to 3.92% for 
the three months ended March 31, 1999 from 3.89% for the three months ended 
 March 31, 1998.  As a result, the interest rate spread decreased to 3.19% 
for the three months ended March 31, 1999 from 3.47% for the three months 
ended March 31, 1998.

      Net interest income for the nine months ended March 31, 1999 was $5.6 
million as compared to $4.7 million for the nine months ended March 31, 
1998. The $916,000 or 19.6 % increase can be attributed to a combination of 
the $1.3 million increase in interest and dividend income and the $374,000 
increase in interest expense on deposits and borrowed funds.  The average 
yield on interest earning assets decreased 30 basis points to 7.25 % for the 
nine months ended March 31, 1999 from 7.55% for the nine months ended March 
31, 1998, while the average cost on interest-bearing liabilities decreased 
by one basis point to 3.98% for the nine months ended March 31, 1999 from 
3.99% for the nine months ended March 31, 1998.  As a result, the interest 
rate spread decreased to 3.27% for the nine months ended March 31, 1999 from 
3.56% for the nine months ended March 31, 1998.

      Provision for Loan Losses.  The provision for loan losses for the 
three and nine months ended March 31, 1999 was $0 and $90,000, respectively, 
compared to $65,000 and $215,000  for the three and nine months ended March 
31, 1998, respectively.  This decrease reflects the decrease in non-
performing loans at March 31, 1999 compared to March 31, 1998.  At March 31, 
1999, the balance of the allowance for loan losses was $1,308,000  or .87% 
of net loans.  During the nine months ended March 31, 1999, $20,000 was 
charged against the allowance for loan losses while $2,000 in recoveries was 
credited to the allowance for loan losses.   At March 31, 1998, the balance 
of the allowance for loan losses was $1,204,000 or .91% of net loans.  
During the nine months ended  March 31, 1998, $2,000 was charged against the 
allowance for loan losses while $14,000 in recoveries was credited to the 
allowance for loan losses.

      Other Income.  Other income was $234,000 for the three months ended 
March 31, 1999 compared to $252,000 for the three months ended March 31, 
1998. The $18,000 decrease was primarily the result of a $3,000 decrease in 
the gain on the sales of mortgage loans and decrease in the sale on the 
sales of investment securities of $7,000.  Other income was $797,000 for the 
nine months ended March 31, 1999 compared to $800,000 for the nine months 
ended March 31, 1998.  The $3,000 decrease was primarily the result of a 
$63,000 increase in the gain on the sales of mortgage loans, offset by a 
decrease in the gain on the sales of investment securities of $84,000.  

      Operating Expenses.  Operating expenses increased by $311,000 or 26.1% 
to $1.5 million for the three months ended March 31, 1999 from $1.2 million 
for the three months ended March 31, 1998.   Salaries and employee benefits 
increased by $118,000 due to staff hired for the opening of a new branch 
office in Lexington, Massachusetts, in November 1998, expense accruals for 
the Company's Recognition and Retention Plan, and normal salary increases. 
Salary and employee benefits also increased because of higher commission 
payments to residential loan originators as a result of higher volumes of 
lending activity.  Occupancy and equipment expenses increased by $74,000, 
primarily due to the opening of the Lexington branch.  An increase in other 
general and administrative expenses of $94,000 was caused by higher 
professional fees, liability insurance costs, and additional operating costs 
from operating as a publicly held stock institution, and promotional costs 
associated with the Lexington office opening.

      Operating expenses increased by $810,000 or 23.2% to $4.3 million for 
the nine months ended March 31, 1999 from $3.5 million for the nine months 
ended March 31, 1998.   Salaries and employee benefits increased by 
$342,000, of which $124,000 is attributable to the Company's adoption of an 
Employee Stock Ownership Plan ("ESOP").  Salaries and employee benefits also 
increased by $72,000 due to expense accruals for supplemental retirement 
benefits and a Benefit Restoration Plan for the Company's Chief Executive 
Officer, and $24,000 due to expense accruals for the Company's Recognition 
and Retention Plan. Salary and employee benefits also increased because of 
higher commission payments to residential loan originators as a result of 
higher volumes of lending activity.  The remainder of the increase is due to 
staff  hired for the opening of a new branch office in Lexington, 
Massachusetts, in November 1998 and normal salary increases.   An increase 
in other general and administrative expenses of $357,000 was caused by 
higher professional fees, liability insurance costs and additional operating 
costs from operating as a publicly held stock institution, and promotional 
costs associated with the Lexington office opening.  Annual operating 
expenses are also expected to increase in future periods due to the 
increased cost of operating as a publicly held stock institution and the 
ongoing operating costs of the new Lexington office.

Asset/Liability Management

      A principal operating objective of the Company is to produce stable 
earnings by achieving a favorable interest rate spread that can be sustained 
during fluctuations in prevailing interest rates.  Since the Company's 
principal interest-earning assets have longer terms to maturity than its 
primary source of funds, i.e. deposit liabilities, increases in general 
interest rates will generally result in an increase in the Company's cost of 
funds before the yield on its asset portfolio adjusts upward.  Banking 
institutions have generally sought to reduce their exposure to adverse 
changes in interest rates by attempting to achieve a closer match between 
the periods in which their interest-bearing liabilities and interest-earning 
assets can be expected to reprice through the origination of adjustable-rate 
mortgages and loans with shorter terms and the purchase of other shorter 
term interest-earning assets.

      The term "interest rate sensitivity" refers to those assets and 
liabilities which mature and reprice periodically in response to 
fluctuations in market rates and yields.  Thrift institutions have 
historically operated in a mismatched position with interest-sensitive 
liabilities exceeding interest-sensitive assets in the short-term time 
periods.  As noted above, one of the principal goals of the Bank's 
asset/liability program is to more closely match the interest rate 
sensitivity characteristics of the asset and liability portfolios.

      In order to properly manage interest rate risk, the Board of Directors 
has established an Asset/Liability Management Committee ("ALCO") made up of 
members of management to monitor the difference between the Company's 
maturing and repricing assets and liabilities and to develop and implement 
strategies to decrease the "negative gap" between the two.  The primary 
responsibilities of the committee are to assess the Company's 
asset/liability mix, recommend strategies to the Board that will enhance 
income while managing the Company's vulnerability to changes in interest 
rates and report to the Board the results of the strategies used.

      Since the early 1980s, the Bank has stressed the origination of 
adjustable-rate residential mortgage loans and adjustable-rate home equity 
loans.  Historically, the Bank attempts to sell fixed rate loans with terms 
in excess of 15 years.  Since 1995, the Bank has also emphasized commercial 
loans with short-term maturities or repricing intervals as well as 
commercial real estate mortgages with short-term repricing intervals.  In 
addition, the Company has used borrowings from the FHLBB to match-fund the 
maturity or repricing interval of several larger commercial real estate 
mortgages.

      In the future, in managing its interest rate sensitivity, the Company 
intends to continue to stress the origination of adjustable-rate mortgages 
and loans with shorter maturities and the maintenance of a consistent level 
of short-term securities.

Liquidity and Capital Resources

      The Company's primary sources of funds consist of deposits, 
borrowings, repayment and prepayment of loans, sales and participations of 
loans, maturities of investments and interest-bearing deposits, and funds 
provided from operations.  While scheduled repayments of loans and 
maturities of investment securities are predictable sources of funds, 
deposit flows and loan prepayments are greatly influenced by the general 
level of interest rates, economic conditions, and competition.  The Company 
uses its liquidity resources primarily to fund existing and future loan 
commitments, to fund net deposit outflows, to invest in other interest-
earning assets, to maintain liquidity, and to meet operating expenses.

      The Company is required to maintain adequate levels of liquid assets. 
 This guideline, which may be varied depending upon economic conditions and 
deposit flows, is based upon a percentage of deposits and short-term 
borrowings.  The Company has historically maintained a level of liquid 
assets in excess of regulatory requirements.  The Company's liquidity ratio 
at March 31, 1999 was 34.8%.

      A major portion of the Company's liquidity consists of cash and cash 
equivalents, short-term U.S. Government and Federal Agency obligations, and 
corporate bonds.  The level of these assets is dependent upon the Company's 
operating, investing, lending and financing activities during any given 
period.

      Liquidity management is both a daily and long-term function of 
management.  If the Company requires funds beyond its ability to generate 
them internally, the Company believes it could borrow additional funds from 
the FHLBB.  At March 31, 1999, the Company had borrowings of $20.1 million 
from the FHLBB.

      At March 31, 1999, the Company had $7.6 million in outstanding 
commitments to originate loans.  The Company anticipates that it will have 
sufficient funds available to meet its current loan origination commitments. 
 Certificates of deposit which are scheduled to mature in one year or less 
totaled $60.4 million at March 31, 1999.  Based upon historical experience, 
management believes that a significant portion of such deposits will remain 
with the Bank.

      At March 31, 1999, the Company and the Bank exceeded all of their 
regulatory capital requirements.

Year 2000

      The  "Year 2000 Problem" centers on the inability of computer systems 
to recognize the Year 2000.  Many existing computer programs and systems 
were originally programmed with six digit dates that provided only two 
digits to identify the calendar year in the date field, without considering 
the upcoming change in the century. With the impending millennium, these 
programs and computers will recognize "00" as the year 1900 rather than the 
year 2000. Like most financial service providers, the Bank and its 
operations may be significantly affected by the Year 2000 Problem due to the 
nature of financial information.  Software, hardware, and  equipment both 
within and outside the Bank's direct control and with whom the Bank 
electronically or operationally interfaces (e.g. third party vendors 
providing data processing, information system management, maintenance of 
computer systems, and credit bureau information) are likely to be affected. 
Furthermore, if computer systems are not adequately changed to identify the 
Year 2000, many computer applications could fail or create erroneous 
results.  As a result, many calculations which rely on the date field 
information,  such as interest,  payment or due dates and other operating 
functions, will generate results which could be significantly misstated, and 
the Bank could experience a temporary inability to process transactions, 
send invoices or engage in similar normal business activities.

      The Company and the Bank are utilizing both internal and external 
resources to identify, correct or reprogram, and test the systems for the 
year 2000 compliance.  All significant reprogramming efforts were complete 
by December 31, 1998, allowing adequate time for testing.  To date, 
confirmations have been received from the Company's and the Bank's primary 
data processing vendors that plans are being developed to address processing 
of transactions in the year 2000.  Although the Company cannot currently 
estimate the extent to which any failure to process date information 
correctly could have a material adverse effect on the Company's business, 
operations or financial condition, management believes that, if not 
adequately addressed, such delays, errors or failures could have a 
significant adverse impact on the financial condition and results of 
operation of the Company.

      In addition,  monitoring  and  managing the year 2000 project will 
result in additional direct and indirect costs to the Company and the Bank. 
Direct costs include potential charges by third party software vendors for 
product enhancements, costs involved in  testing  software  products  for  
year  2000 compliance,  and any resulting costs for developing and 
implementing contingency plans for critical software products which are not 
enhanced.  Indirect costs will principally consist of the time devoted by 
existing  employees  in  monitoring software vendor progress, testing 
enhanced software products and implementing any necessary contingency plans. 
The Company has spent approximately $78,000 on Year 2000 related costs to 
date and estimates that it will spend an additional $75,000 for Year 2000 
compliance.  Both direct and indirect costs of addressing the Year 2000 
Problem will be charged to earnings as incurred. The Company does not 
believe that such costs will have a material effect on results of 
operations.  However, there can be no guarantee that the systems of other 
companies on which the Company's systems rely will be timely converted, or 
that a failure to convert by another company or a conversion that is 
incompatible with the Company's systems, would not have material adverse 
effect on the Company.  Although no independent analysis of the Company's 
potential exposure has been obtained, the Company believes it has no 
exposure to contingencies related to the Year 2000 Problem for the products 
it has sold. 

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

Item 3.   Quantitative and Qualitative Disclosures About Market Risk

      There has been no material change in market risk since June 30, 1998.

PART II.  OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders

      The Company held a Special Meeting of Stockholders (the "Special 
Meeting") on March 24, 1999.  All of the proposals submitted to the 
stockholders were approved.  The proposals submitted to stockholders and the 
tabulation of votes for each proposal is as follows:

       1. Approval of the Mystic Financial, Inc. 1999 Stock Option Plan

            For:          1,395,433
            Against:        147,337
            Abstained:       18,560

      There were no broker held non-voted shares represented at the Special 
Meeting with respect to this matter.

       2. Approval of the Mystic Financial, Inc. 1999 Recognition and 
          Retention Plan

            For:          1,309,784
            Against:        226,616
            Abstained:       24,930

      There were no broker held non-voted shares represented at the Special 
Meeting with respect to this matter.

Item 6.   Exhibits and Reports on Form 8-K

      (a) Exhibits

          27.1 Financial Data Schedule

      (b) Reports on Form 8-K

          None

                                 SIGNATURES

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

                                   MYSTIC FINANCIAL, INC.

Date: May 14,1999                  By: /s/ Robert H. Surabian
      -----------------                -------------------------------------
                                       Robert H. Surabian
                                       President and Chief Executive Officer

Date: May 14, 1999                 By: /s/ Ralph W. Dunham
      -----------------                -------------------------------------
                                       Ralph W. Dunham
                                       Executive Vice-President, Chief
                                       Financial Officer, and Treasurer