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 September 30, 1997

                                      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 of                 (I.R.S. Employer
     incorporation or organization)                Identification No.)


             60 HIGH STREET                               02155
         MEDFORD, MASSACHUSETTS
(Address of principal executive officers)               (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  [ ]      NO      [X]

As of February 12, 1998, 2,711,125 shares of the registrant's common stock 
were outstanding. (See Note 3 to Financial Statements.)


<PAGE>  


                    MYSTIC FINANCIAL, INC. AND SUBSIDIARY

                                    INDEX

PART I  FINANCIAL INFORMATION                                        Page

Item 1  Financial Statements:

      Consolidated Balance Sheets - September 30, 1997
       and June 30, 1997                                                1

      Consolidated Statements of Income - Three months
       ended September 30, 1997 and 1996                                2

      Consolidated Statement of Changes in Surplus -
       Three months ended September 30, 1997                            3

      Consolidated Statements of Cash Flows - Three months
       ended September 30, 1997 and 1996                                4

      Notes to Consolidated Financial Statements -
       September 30, 1997                                               5

Item 2  Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                      10

PART II  OTHER INFORMATION

Item 6  Exhibits and Reports on Form 8-K                               18

      SIGNATURES                                                       19


<PAGE>  


                 Medford Co-Operative Bank and Subsidiaries
                       Part I - Financial Information
                        Item 1 - Financial Statements
                         Consolidated Balance Sheets
                               (In Thousands)

<TABLE>
<CAPTION>
                                                    September 30,   June 30,
                                                        1997          1997
                                                    -------------   --------
                                                            (Unaudited)

<S>                                                   <C>           <C>
Assets
  Cash and due from banks                             $  4,615      $  3,953
  Federal funds sold                                     4,780         2,075
  Short-term investments                                   341           197
                                                      ----------------------

      Total cash and cash equivalents                    9,736         6,225

  Securities available for sale, at fair value           2,395         3,819
  Securities held to maturity, at amortized cost        17,502        17,504
  Federal Home Loan Bank stock, at cost                    858           858
  Loans, net of allowance for loan losses of $1,049
   and $977, respectively                              119,650       114,568
  Mortgage loans held for sale, net                      1,395           210
  Bank premises and equipment, net                       2,696         2,697
  Real estate held for investment, net                   1,827         1,840
  Accrued interest receivable                              899           870
  Due from Co-operative Central Bank                       669           669
  Other assets                                             448           393
                                                      ----------------------
                                                      $158,075      $149,653
                                                      ======================

Liabilities and Surplus
  Deposits                                            $133,126      $129,303
  Federal Home Loan Bank borrowings                     11,524         7,532
  Mortgagors' escrow accounts                              473           386
  Accrued interest payable                                 264           249
  Accrued expenses and other liabilities                   384           243
                                                      ----------------------

      Total liabilities                                145,771       137,713
                                                      ----------------------

Surplus                                                 12,116        11,761
Net unrealized gain on securities available for
 sale, net of tax effects                                  188           179
                                                      ----------------------

      Total surplus                                     12,304        11,940
                                                      ----------------------

                                                      $158,075      $149,653
                                                      ======================
</TABLE>

    See accompanying notes to unaudited consolidated financial statements.


<PAGE>  -1-


                 Medford Co-Operative Bank and Subsidiaries
                       Part I - Financial Information
                        Item 1 - Financial Statements
                      Consolidated Statements of Income
                               (In Thousands)

<TABLE>
<CAPTION>
                                                       Three                Three
                                                    Months Ended         Months Ended
                                                 September 30, 1997   September 30, 1996
                                                 ------------------   ------------------
                                                               (Unaudited)

<S>                                                    <C>                 <C>
Interest and dividend income:
  Interest and fees on loans                           $2,395              $1,950
  Interest and dividends on investment
   securities                                             294                 263
  Other interest                                           96                 119
                                                       --------------------------

      Total interest and dividend income                2,785               2,332
                                                       --------------------------

Interest expense:
  Deposits                                              1,235               1,153
  Federal Home Loan Bank borrowings                       156                   9
                                                       --------------------------

      Total interest expense                            1,391               1,162
                                                       --------------------------

  Net interest income                                   1,394               1,170
  Provision for loan losses                                70                  25
                                                       --------------------------

  Net interest income, after provision for loan
   losses                                               1,324               1,145
                                                       --------------------------

Other income:
  Customer service fees                                   127                 124
  Gain on sales of mortgage loans                           7                  22
  Gain on sales of securities available for
   sale, net                                              141                   2
  Miscellaneous                                            70                  81
                                                       --------------------------

      Total other income                                  345                 229
                                                       --------------------------

Operating expenses:
  Salaries and employee benefits                          657                 631
  Occupancy and equipment expenses                        151                 115
  Data processing expenses                                 59                  40
  Other general and administrative expenses               203                 250
                                                       --------------------------

      Total operating expenses                          1,070               1,036
                                                       --------------------------

  Income before income taxes                              599                 338
  Provision for income taxes                              244                 139
                                                       --------------------------
  Net income                                           $  355              $  199
                                                       ==========================
</TABLE>

   See accompanying notes to unaudited consolidated financial statements.


<PAGE>  -2-


                 Medford Co-operative Bank and Subsidiaries
                       Part I - Financial Information
                        Item 1 - Financial Statements
                Consolidated Statement of Changes in Surplus
                               (In Thousands)

<TABLE>
<CAPTION>
                                                     Net Unrealized
                                                   Gain on Securities     Total
                                        Surplus    Available for Sale    Surplus
                                        -------    ------------------    -------
                                                      (Unaudited)

<S>                                     <C>               <C>            <C>
Balance at June 30, 1997                $11,761           $179           $11,940

Net income                                  355              0               355

Change in net unrealized gain on
 securities available for sale, net
 of tax effects                               0              9                 9
                                        ----------------------------------------

Balance at September 30, 1997           $12,116           $188           $12,304
                                        ========================================
</TABLE>

   See accompanying notes to unaudited consolidated financial statements.


<PAGE>  -3-


                 Medford Co-Operative Bank and Subsidiaries
                       Part I - Financial Information
                       Item 1 - Financial Statements
                    Consolidated Statements of Cash Flows
                               (In Thousands)

<TABLE>
<CAPTION>
                                                 Three                 Three
                                              Months Ended          Months Ended
                                           September 30, 1997    September 30, 1996
                                           ------------------    ------------------
                                                          (Unaudited)

<S>                                             <C>                   <C>
Cash flows from operating activities:
  Net income                                    $   355               $   199
  Adjustments to reconcile net income to
   net cash provided (used) by
   operating activities:
    Provision for loan losses                        70                    25
    Gain on sales of securities available
     for sale, net                                 (141)                   (2)
    Depreciation expense                             85                    79
    Mortgage loans originated for sale           (2,042)                    0
    Principal balance of mortgage loans sold        857                   829
    (Increase) decrease in accrued interest
     receivable                                     (29)                   22
    Increase in other assets                        (37)                   (6)
    Increase in accrued interest payable             15                    19
    Increase in accrued expenses and other
     liabilities                                    141                    42
                                                -----------------------------
      Net cash provided (used) by operating
       activities                                  (726)               (1,207)
                                                -----------------------------

Cash flows from investing activities:
    Proceeds from maturities of securities
     held to maturity                                 2                 4,005
    Purchase of securities held to maturity           -                (5,000)
    Purchase of securities available for sale      (743)               (1,569)
    Proceeds from sales of securities
     available for sale                           2,299                    48
    Loans originated, net of payments
     received                                    (5,152)               (4,831)
    Purchases of banking premises and
     equipment                                      (71)                  (30)
                                                -----------------------------
      Net cash used by investing activities      (3,665)               (7,377)
                                                -----------------------------

Cash flows from financing activities:
    Net increase in deposits                      3,823                   717
    Proceeds from borrowings                     12,000                 1,663
    Repayment of borrowings                      (8,008)                 (665)
    Net increase in mortgagors' escrow
     accounts                                        87                    35
                                                -----------------------------
      Net cash provided by financing
       activities                                 7,902                 1,750
                                                -----------------------------

Net change in cash and cash equivalents           3,511                (4,420)

Cash and cash equivalents at beginning
 of period                                        6,225                 8,771
                                                -----------------------------

Cash and cash equivalents at end of period      $ 9,736               $ 4,351
                                                =============================

Supplemental cash flow information:
    Interest paid on deposits                   $ 1,237               $ 1,146
    Interest paid on Federal Home Loan Bank
     borrowings                                     139                     -
    Income taxes paid                                30                    86
</TABLE>


<PAGE>  -4-


   See accompanying notes to unaudited consolidated financial statements.

                 Medford Co-Operative Bank and Subsidiaries
                       Part I - Financial Information
                       Item 1 - Financial Statements
            Notes to Unaudited Consolidated Financial Statements
                             September 30, 1997

1)  Basis of Presentation and Consolidation

The unaudited consolidated interim financial statements of Medford Co-
operative Bank and subsidiaries (the "Bank") presented herein should be read 
in conjunction with the consolidated financial statements of Medford Co-
operative Bank for the year ended June 30, 1997, included in the 
registration statement on Form S-1 of Mystic Financial, Inc. ("Mystic" or 
the "Company"), the holding company for Medford Co-operative Bank.  The 
financial statements of Mystic have been omitted because Mystic had not 
issued any stock, had no liabilities and had not conducted any business 
other than of an organizational nature as of September 30, 1997.

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 to 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 September 30, 1997, the Bank had outstanding commitments to originate 
loans amounting to approximately $8.3 million, unadvanced funds on 
construction loans and lines of credit amounting to approximately $263,000 
and $3.1 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. 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."


<PAGE>  -5-


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 
$25.8 million.  On January 8, 1998, the Company loaned approximately $3.2 
million to the Company's Employee Stock Ownership Plan to fund its purchase 
of 216,890 shares of common stock of the Company in open-market purchases 
following completion of the Conversion.

4)  Investment Securities

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

<TABLE>
<CAPTION>
                                  September 30, 1997         June 30, 1997
                                ---------------------   ---------------------
                                Amortized      Fair     Amortized      Fair
                                   Cost        Value       Cost        Value
                                ---------      -----    ---------      -----
                                               (In Thousands)

<S>                               <C>         <C>         <C>         <C>
Securities available for sale:
  Marketable equity securities    $ 2,128     $ 2,395     $ 3,543     $ 3,819
                                  ===========================================

Securities held to maturity:
  U.S. Government & Federal
   Agency Obligations             $14,982     $14,970     $14,976     $14,908

  Other bonds & obligations         2,520       2,526       2,528       2,523
                                  -------------------------------------------

      Total                       $17,502     $17,496     $17,504     $17,431
                                  ===========================================
</TABLE>


<PAGE>  -6-


5)  Loans

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

<TABLE>
<CAPTION>
                                       September 30, 1997        June 30, 1997  
                                       ------------------     ------------------
                                       Amount     Percent     Amount     Percent
                                       ------     -------     ------     -------
                                                (Dollars in Thousands)

<S>                                   <C>          <C>       <C>          <C>
Residential mortgage loans            $ 94,146     78.7%     $ 90,203     78.7%

Commercial real estate loans            18,667     15.6        17,847     15.6

Commercial loans                         4,114      3.4         3,677      3.2

Consumer loans                           1,711      1.4         1,655      1.4

Home equity loans                        1,562      1.3         1,564      1.4

Construction loans                         786      0.7           976      0.9
                                      ----------------------------------------

Total loans                            120,986    101.1       115,922    101.2

Less:

Deferred loan origination fees              24      0.0           37       0.0

Unadvanced principal                       263      0.2          340       0.3

Allowance for loan losses                1,049      0.9          977       0.9
                                      ---------------------------------------- 

                                      $119,650    100.0%    $114,568     100.0%
                                      ========================================
</TABLE>


<PAGE>  -7-


6)  Allowance for Loan Losses

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

<TABLE>
<CAPTION>
                                           Three                  Three
                                        Months Ended           Months Ended
                                     September 30, 1997     September 30, 1996
                                     ------------------     ------------------
                                              (Dollars in Thousands)

<S>                                       <C>                    <C>
Average loans, net                        $117,306               $ 97,787
                                          ===============================

Period-end net loans                      $119,650               $ 99,859
                                          ===============================

Allowance for loan losses at
 beginning of period                           977                    742

Provision for loan losses                       70                     25

Plus recoveries                                  2                      5

Loans charged-off                                0                    (10)
                                          -------------------------------

Allowance for loan losses at end
 of period                                $  1,049               $    762
                                          ===============================

Non-performing loans                      $    342               $    545
                                          ===============================

Ratios:

Allowance for loan losses to period
 end net loans                                0.87%                  0.76%

Allowance for loan losses to
 non-performing loans                       306.73%                139.82%

Net charge-offs (recoveries) to average
 loans, net                                  (0.01)%                 0.02%
</TABLE>


<PAGE>  -8-


7)  Deposits and Borrowed Funds

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

<TABLE>
<CAPTION>
                                    September 30, 1997          June 30, 1997
                                   --------------------      -------------------
                                    Amount      Percent      Amount      Percent
                                    ------      -------      ------      -------
                                               (Dollars in Thousands)

<S>                                <C>           <C>        <C>           <C>
Deposits:

Savings deposits                   $ 40,802      30.7%      $ 40,794      31.6%

NOW accounts                         21,808      16.4         17,975      13.9

Money market deposits                 6,643       5.0          6,489       5.0

Demand deposits                       5,507       4.1          4,910       3.8

Certificates of deposits             58,366      43.8         59,135      45.7
                                   -------------------------------------------

Total deposits                     $133,126     100.0%      $129,303     100.0%
                                   ===========================================

Borrowed Funds:

Advances from Federal Home Loan
 Bank of Boston:

Maturities less than one year      $  5,424      47.1%      $  2,100      27.9%

Maturities greater than one year      6,100      52.9%         5,432      72.1%
                                   -------------------------------------------

Total borrowed funds               $ 11,524     100.0%      $  7,532     100.0%
                                   ===========================================
</TABLE>


<PAGE>  -9-


                 Medford Co-Operative Bank and Subsidiaries
                       Part I - Financial Information
              Item 2 - Management's Discussion and Analysis of
                Financial Condition and Results of Operations
                             September 30, 1997

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 estates values and other economic conditions in eastern Massachusetts, 
the Bank's principal market area.  The Bank 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 Bank's 
financial results are included in the registration statement on Form S-1 of 
Mystic.

The Bank'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 Bank's profitability is also affected by the level of other income and 
operating expenses.  Noninterest income or 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 Bank, 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 


<PAGE>  -10-


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 Bank'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.  Interest earned on loan 
portfolios is net of reserves for uncollected interest.  The investment 
securities in the following tables are presented at amortized cost.


<PAGE>  -11-


<TABLE>
<CAPTION>
                                    Three Months Ended September 30, 1997   Three Months Ended September 30, 1996
                                    -------------------------------------   -------------------------------------
                                    Average      Interest                    Average      Interest
                                    Balance   Income/Expense   Yield/Rate    Balance   Income/Expense   Yield/Rate
                                    -------   --------------   ----------    -------   --------------   ----------
                                                               (Dollars in Thousands)

<S>                                 <C>           <C>             <C>        <C>           <C>             <C>
INTEREST-EARNING ASSETS:
  Total loans, net                  $117,306      $2,395          8.17%      $ 97,787      $1,950          7.98%
  Investments                         20,228         294          5.81%        18,611         263          5.65%
  Other earning assets                 7,059          96          5.44%         7,423         119          6.41%
                                    --------------------                     --------------------
Total interest-earning assets        144,593       2,785          7.70%       123,821       2,332          7.53%
                                                  ------                                   ------
Cash and due from banks                3,214                                    2,054
Other assets                           5,784                                    5,587
                                    --------                                 --------
      Total assets                  $153,591                                 $131,462
                                    ========                                 ========

INTEREST-BEARING LIABILITIES:
  Regular and other deposits        $ 41,217         280          2.72%      $ 40,552         285          2.81%
  Now accounts                        19,094          86          1.80%        14,000          76          2.17%
  Money market deposits                6,520          43          2.64%         5,994          39          2.60%
  Certificates of deposit             59,003         826          5.60%        54,735         753          5.50%
                                    --------------------                     --------------------
      Total interest-bearing
       deposits                      125,834       1,235          3.93%       115,281       1,153          4.00%

  FHLB borrowings                      9,887         156          6.31%           522           9          6.90%
                                    --------------------                     --------------------

      Total interest-bearing
       liabilities                   135,721       1,391          4.10%       115,803       1,162          4.01%
                                                  ------                                   ------

Demand deposit accounts                5,509                                    4,059
Other liabilities                        464                                      463
                                    --------                                 --------

      Total liabilities              141,694                                  120,325

Surplus                               11,897                                   11,137
                                    --------                                 --------
Total liabilities and surplus       $153,591                                 $131,462
                                    ========                                 ========
Net interest income                               $1,394                                   $1,170
                                                  ======                                   ======
Interest rate spread                                              3.60%                                    3.52%
Net interest margin                                               3.86%                                    3.78%
Interest earning assets/
 interest-bearing liabilities:                                    1.07x                                    1.07x
</TABLE>


<PAGE>  -12-


Rate/Volume Analysis

The following table sets forth certain information regarding changes in 
interest income and interest expense of the Bank 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 September 30,
                                                        1997 vs 1996
                                                     Increase (decrease)
                                              --------------------------------
                                                      Due to
                                                  ---------------
                                                  Rate     Volume     Total
                                                  ----     ------     -----
                                                       (In Thousands)

<S>                                               <C>       <C>       <C>
Interest and dividend income:

Loans, net                                        $ 47      $398      $445

Investments                                          8        23        31

Other earning assets                                (5)      (18)      (23)
                                                  ------------------------

      Total                                         50       403       453
                                                  ------------------------

Interest expense:

Deposits                                           (20)      102        82

Borrowed funds                                      (2)      149       147
                                                  ------------------------

      Total                                        (22)      251       229
                                                  ------------------------

Change in net interest income                     $ 72      $152      $224
                                                  ========================
</TABLE>

Financial Condition and Results of Operation

Comparison of Financial Condition at September 30, 1997
 and June 30, 1997.

The Bank's total assets increased by $8.4 million or 5.6% to $158.1 million 
at September 30, 1997 from $149.7 at June 30, 1997.   The increase in total 
assets is primarily attributable to a $5.1 million increase in net loans and 
a $2.8 million increase in federal funds sold and short-term investments.  
Total net loans increased by $5.1 million or 4.4% to $119.7 million or 75.7% 
of total assets at September 30, 1997 as compared to $114.6 million or 76.6% 
of total assets at June 30, 1997.  Investment securities held by the Bank 


<PAGE>  -13-


decreased by $1.4 million or 6.7% to $19.9 million at September 30, 1997 
from $21.3 million in June 30, 1997.  Federal Funds sold and short-term 
investments increased by $2.8 million to $5.1 million at September 30, 1997 
from $2.3 million at June 30, 1997.

Total deposits increased by $3.8 million or 3.0% to $133.1 million at 
September 30, 1997 from $129.3 million at June 30, 1997.  Total borrowings 
increased by $4.0 million to $11.5 million at September 30, 1997 from $7.5 
million at June 30, 1997.  The Bank's continued use of borrowed funds 
reflects additional funding needed to support its continued growth in net 
loans.  Surplus increased by $364,000 or 3.0% to $12.3 million at September 
30, 1997 from $11.9 million at June 30, 1997 as a result of net income of 
$355,000 and an increase in the net unrealized gain on securities available 
for sale of $9,000.

Comparison of the Operating Results for the Three Months Ended September 30, 
1997 and 1996.

Net Income.  The Bank's net income for the three months ended September 30, 
1997 was $355,000 as compared to $199,000 for the three months ended 
September 30, 1996.  This $156,000 or 78.4% increase in net income during 
the period was the result of an increase of $224,000 in net interest income 
and an increase of $116,000 in other income, offset by an increase of 
$45,000 in provision for loan losses, an increase of $34,000 in operating 
expenses, and an increase in provision for income taxes of $105,000.  The 
Bank's continued expansion of its lending activities accounted for the 
increase in net interest income, while its other income increased due to 
gain on sales of investment securities.  The return on average assets for 
the three months ended September 30, 1997 was .92% compared to .61% for the 
three months ended September 30, 1996.

Interest Income.  Total interest and dividend income increased by $453,000 
or 19.4% to $2.8 million for the three months ended September 30, 1997 from 
$2.3 million for the three months ended September 30, 1996.  The increase in 
interest income was a result of a higher level of loans and a greater mix of 
higher yielding commercial and commercial real estate loans funded by 
maturing lower yield investment securities and other earning assets. The 
average balance of net loans for the three months ended September 30, 1997 
was $117.3 million compared to $97.8 million for the three months ended 
September 30, 1996.  The average yield on net loans was 8.17% for the three 
months ended September 30, 1997 compared to 7.98% for the three months ended 
September 30, 1996.

Interest Expense.  Interest expense increased by $229,000 or 19.7% to $1.4 
million for the three months ended September 30, 1997 from $1.2 million for 
the three months ended September 30, 1996.  The reason for the increase in 
interest expense was the increase in the overall deposit balances as well as 
an increase in Federal Home Loan Bank of Boston borrowings.  Average 
interest-bearing deposits  increased by $10.6 million or 9.2% to $125.8 
million for the three months ended September 30, 1997 from $115.3 million 
for the three months ended September 30, 1996.  Average borrowings increased 


<PAGE>  -14-


by $9.4 million to $9.9 million for the three months ended September 30, 
1997 from $522,000 for the three months ended September 30, 1996.

Net Interest Income.  The net interest income for the three months ended 
September 30, 1997 was $1.4 million as compared to $1.2 million for the 
three months ended September 30, 1996.  The $224,000 or 19.1% increase can 
be attributed to a combination of the $453,000 increase in interest and 
dividend income and the $229,000 increase in interest expense on deposits 
and borrowed funds.  The average yield on interest earning assets increased 
17 basis points to 7.70% for the three months ended September 30, 1997 from 
7.53% for the three months ended September 30, 1996, while the average cost 
on interest-bearing liabilities increased by 9 basis points to 4.10% for the 
three months ended September 30, 1997 from 4.01% for the three months ended 
September 30, 1996.  As a result, the interest rate spread increased to 
3.60% for the three months ended September 30, 1997 from 3.52% for the three 
months ended September 30, 1996.

Provision for Loan Losses.  The provision for loan losses was $70,000 for 
the three months ended September 30, 1997 as compared to $25,000 for the 
three months ended September 30, 1996.  At September 30, 1997, the balance 
of the allowance for loan losses was $1,049,000 or .87% of total loans.  
During the three months ended September 30, 1997, no amount was charged 
against allowance for loan losses while $2,000 in recoveries was credited to 
the allowance for loan losses.  At September 30, 1996, the balance of the 
allowance for loan losses was $762,000 or .76% of total loans.  During the 
three months ended September 30, 1996, $10,000 was charged against allowance 
for loan losses while $5,000 in recoveries was credited to the allowance for 
loan losses.  Non-performing loans at September 30, 1997 and 1996 were 
$342,000 and $545,000, respectively.

Other Income.  Other income was $345,000 for the three months ended 
September 30, 1997 compared to $229,000 for the three months ended September 
30, 1996.  The $116,000 or 50.7% increase was primarily the result of a 
$139,000 increase in gain on sales of investment securities and a decrease 
in the gain on the sale of mortgage loans held for sale of $15,000.

Operating Expenses.  Operating expenses increased to $1.1 million for the 
three months ended September 30, 1997 from $1.0 million for the three months 
ended September 30, 1996.  The increase of $34,000 or 3.3% mainly resulted 
from a general increase in operating expenses.  Annual operating expenses 
are also expected to increase in future periods due to the increased cost of 
operating as a stock institution.

Asset/Liability Management

A principal operating objective of the Bank is to produce stable earnings by 
achieving a favorable interest rate spread that can be sustained during 
fluctuation in prevailing interest rates.  Since the Bank'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 Bank's cost of funds 
before the yield on its asset portfolio adjusts upward.  Banking 


<PAGE>  -15-


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 Bank's Board of 
Directors has established an Asset/Liability Management Committee ("ALCO") 
made up of members of management to monitor the difference between the 
Bank'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 Bank's 
asset/liability mix, recommend strategies to the Board that will enhance 
income while managing the Bank'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 Bank has used borrowings from the Federal Home Loan Bank of 
Boston 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 Bank 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 Bank'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 Bank 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.


<PAGE>  -16-


The Bank 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 Bank has historically maintained a level of liquid assets 
in excess of regulatory requirements.  The Bank's liquidity ratio at 
September 30, 1997 was 19.0%.

A major portion of the Bank'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 Bank's 
operating, lending and financing activities during any given period.

Liquidity management is both a daily and long-term function of management.  
If the Bank requires funds beyond its ability to generate them internally, 
the Bank believes it could borrow additional funds from the Federal Home 
Loan Bank of Boston.  At September 30, 1997, the Bank had borrowings of 
$11.5 million from the FHLB of Boston.

At September 30, 1997, the Bank had $8.3 million in outstanding commitments 
to originate loans.  The Bank 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 $44.5 
million at September 30, 1997.  Based upon historical experience, management 
believes that a significant portion of such deposits will remain with the 
Bank.

At September 30, 1997, the Bank exceeded all of its regulatory capital 
requirements.

Year 2000

The Company and the Bank are aware of the issues associated with the 
programming code in existing computer systems as the millennium (year 2000) 
approaches.  The "year 2000" problem is pervasive and complex as virtually 
every computer operation will be affected in some way by the rollover of the 
two digit year value to 00.  The issue is whether computer systems will 
properly recognize date sensitive information when the year changes to 2000. 
 Systems that do not properly recognize such information could generate 
erroneous data or cause a system to fail.

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.  It is anticipated that all reprogramming efforts will be 
completed by December 31, 1998, allowing adequate time for testing.  To 
date, confirmations have been received from the Company's and the Bank's 
primary 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.


<PAGE>  -17-


In addition, monitoring and managing the year 2000 project will result in 
additional direct and indirect costs to 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.  Management has not yet 
assessed the year 2000 compliance expense and related potential affect on 
the Company's or the Bank's earnings.  Actual costs will be charged to 
earnings as incurred.  Such costs have not been material to date.

Part II.  Other Information

Item 6. Exhibits and Reports on Form 8-K

      (a)  Exhibits

            27.1  Financial Data Schedule

      (b)  Reports on Form 8-K

            None


<PAGE>  -18-


                                 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:  February 13, 1998               By:  /s/  Robert H. Surabian
                                                 Robert H. Surabian
                                       President and Chief Executive Officer


Date:  February 13, 1998               By:  /s/  Ralph W. Dunham
                                                 Ralph W. Dunham
                                       Executive Vice-President, Chief 
                                       Financial Officer, and Treasurer


<PAGE>  -19-