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 December 31, 1998

                                     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 0-2353

                           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 February 11, 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 - December 31, 1998 
            and June 30, 1998                                           1

           Consolidated Statements of Income - Three and Six Months 
            Months Ended December 31, 1998 and 1997                     2

           Consolidated Statement of Changes in Stockholders'
            Equity-Six Months Ended December 31, 1998 and 1997          3

           Consolidated Statements of Cash Flows - Six Months
            Ended December 31, 1998 and 1997                            4

           Notes to Unaudited Consolidated Financial Statements -
            December 31, 1998                                           5

Item 2     Management's Discussion and Analysis of Financial      
            Condition and Results of Operations                        11

Item 3     Quantitative and Qualitative Disclosures About
            Market Risk                                                24

PART II    OTHER INFORMATION

Item 4     Submission of Matters to a Vote of Security Holders         24

Item 6     Exhibits and Reports on Form 8-K                            24

           SIGNATURES                                                  25


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

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

<S>                                                <C>           <C>
Assets
  Cash and due from banks                          $  7,763      $  7,626
  Federal funds sold                                 16,312        16,773
  Short-term investments                             14,182         1,580
                                                   ----------------------
     Total cash and cash equivalents                 38,257        25,979

  Securities available for sale, at fair value       15,797        14,749
  Securities held to maturity, at amortized cost      4,503        12,006
  Federal Home Loan Bank stock, at cost               1,005           997
  Loans, net of allowance for loan losses of 
   $1,311 and $1,236, respectively                  143,087       138,593
  Mortgage loans held for sale                            -            80
  Bank premises and equipment, net                    2,783         2,559
  Real estate held for investment, net                1,757         1,785
  Accrued interest receivable                         1,016         1,099
  Due from Co-operative Central Bank                    929           929
  Other assets                                          328           273
                                                   ----------------------
                                                   $209,462      $199,049
                                                   ======================

Liabilities and Stockholders' Equity 
  Deposits                                         $152,822      $144,766
  Federal Home Loan Bank borrowings                  20,092        16,505
  Mortgagors' escrow accounts                           675           481
  Accrued interest payable                              344           288
  Accrued expenses and other liabilities                273           882
                                                   ----------------------
     Total liabilities                              174,206       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                                13,733        13,173
                                                   ----------------------
                                                     39,470        38,910
    Treasury Stock, at cost - 137,570 and
     2,120 shares at December 31, 1998 and
     June 30, 1998, respectively                     (1,988)          (21)
    Accumulated other comprehensive income              649           432
    Loan due from ESOP                               (2,875)       (3,194)
                                                   ----------------------
      Total stockholders' equity                     35,256        36,127
                                                   ----------------------
                                                   $209,462      $199,049
                                                   ======================
</TABLE>

    See accompanying notes to unaudited consolidated financial statements.


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

<TABLE>
<CAPTION>
                                                         Three Months Ended       Six Months Ended
                                                        --------------------    --------------------
                                                        December    December    December    December
                                                        31, 1998    31, 1997    31, 1998    31, 1997
                                                        --------    --------    --------    --------
                                                                        (Unaudited)

<S>                                                      <C>         <C>         <C>         <C>
Interest and dividend income:
  Interest and fees on loans                             $2,811      $2,491      $5,584      $4,886
  Interest and dividends on investment securities           294         276         642         570
  Other interest                                            243         170         447         266
                                                         ------------------------------------------
      Total interest and dividend income                  3,348       2,937       6,673       5,722
                                                         ------------------------------------------

Interest expense:
  Deposits                                                1,219       1,252       2,448       2,488
  Federal Home Loan Bank borrowings                         277         180         530         335
                                                         ------------------------------------------
      Total interest expense                              1,496       1,432       2,978       2,823
                                                         ------------------------------------------

Net interest income                                       1,852       1,505       3,695       2,899
Provision for loan losses                                    30          80          90         150
                                                         ------------------------------------------

Net interest income, after provision for loan losses      1,822       1,425       3,605       2,749
                                                         ------------------------------------------

Other income:
  Customer service fees                                     134         135         269         262
  Gain on sales of mortgage loans                            80          16          89          23
  Gain/ (Loss) on sales of securities available
   for sale, net                                              -          (3)         61         138
  Co-operative Central Bank Share Insurance Fund
   Special Dividend                                          51          49          51          49
  Miscellaneous                                              55           6          93          76
                                                         ------------------------------------------
      Total other income                                    320         203         563         548
                                                         ------------------------------------------

Operating expenses:
  Salaries and employee benefits                            810         765       1,646       1,422
  Occupancy and equipment expenses                          118          95         233         246
  Data processing expenses                                   78          65         149         124
  Other general and administrative expenses                 455         308         774         511
                                                         ------------------------------------------
       Total operating expenses                           1,461       1,233       2,802       2,303
                                                         ------------------------------------------
Income before income taxes                                  681         395       1,366         994
Provision for income taxes                                  272         159         542         403
                                                         ------------------------------------------
Net income                                               $  409      $  236      $  824      $  591
                                                         ==========================================
Earnings per share - basic and diluted                   $  .16         N/A      $  .32         N/A
                                                         ======                  ======
Weighted                                                  2,574         N/A       2,602         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
                 Six Months Ended December 31, 1998 and 1997
                               (In Thousands)

<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                      Additional                             Other                       Total
                             Comprehensive   Common    Paid-in     Retained   Treasury   Comprehensive   Loan Due    Stockholders'
                                 Income      Stock     Capital     Earnings     Stock        Income      From 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                       $  824         -            -         824          -            -              -           824
Change in net unrealized 
 gain on securities available
 for sale, net of tax effects       217         -            -           -          -          217              -           217
                                 ------
      Comprehensive income       $1,041
                                 ======
Dividend paid ($.10 per share)                  -            -        (264)         -            -              -          (264)
Purchase of treasury stock                      -            -           -     (1,967)           -              -        (1,967)
Decrease in loan due from ESOP                  -            -           -                       -            319           319
                                              ---------------------------------------------------------------------------------

Balance at December 31, 1998                  $27      $25,710     $13,733    $(1,988)        $649        $(2,875)      $35,256
                                              =================================================================================

Balance at June 30, 1997                      $ -      $     -     $11,761    $     -         $179        $     -       $11,940
Net income                       $  591         -            -         591          -            -              -           591
Change in net unrealized
 gain on securities available
 for sale, net of tax effects        81         -            -           -          -           81              -            81
                                 ------
      Comprehensive income       $  672
                                 ======       ---------------------------------------------------------------------------------

Balance at December 31, 1997                  $ -      $     -     $12,352    $     -         $260        $     -       $12,612
                                              =================================================================================
</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>
                                                 Six Months           Six Months
                                                   Ended                Ended
                                             December 31, 1998    December 31, 1997
                                             -----------------    -----------------
                                                          (Unaudited)

<S>                                              <C>                  <C>     
Cash flows from operating activities: 
  Net income                                     $    824             $    591
  Adjustments to reconcile net income to net
   cash provided (used) by operating
   activities:
    Provision for loan losses                          90                  150
    Net amortization of securities                     19                    -
    Gain on sales of securities available
     for sale                                         (61)                (138)
    Gain on sale of loans                             (89)                   -
    Amortization of loan due ESOP                     319                    -
    Depreciation expense                              166                  170
    Net change in mortgage loans held for sale         80                 (688)
    (Increase) decrease in accrued interest
     receivable                                        83                  (67)
    Increase in other assets                         (173)                (378)
    Increase in accrued interest payable               56                   63
    Decrease in accrued expenses and
     other liabilities                               (609)                 (56)
                                                 -----------------------------
      Net cash provided (used) by operating
       activities                                     705                 (353)
                                                 -----------------------------

Cash flows from investing activities:
  Maturities of securities held to maturity         7,500                1,003
  Sales of securities available for sale            1,097                2,296
  Purchase of securities available for sale        (1,765)                (922)
  Purchase of Federal Home Loan Bank Stock             (8)                   -
  Loans originated, net of payments received      (12,315)              (8,523)
  Proceeds from sale of loans                       7,820                    -
  Purchases of banking premises and equipment        (362)                 (88)
                                                 -----------------------------
      Net cash used by investing activities         1,967               (6,234)
                                                 -----------------------------

Cash flows from financing activities:
  Net increase in deposits                          8,056               43,959
  Proceeds from borrowings                          3,600               20,054
  Repayment of borrowings                             (13)             (16,068)
  Net increase in mortgagors' escrow accounts         194                  140
  Dividends paid                                     (264)                   -
  Purchase of treasury stock                       (1,967)                   -
                                                 -----------------------------
      Net cash provided by financing
       activities                                   9,606               48,085
                                                 -----------------------------

Net change in cash and cash equivalents            12,278               41,498

Cash and cash equivalents at beginning of
 period                                            25,979                6,225
                                                 -----------------------------

Cash and cash equivalents at end of period       $ 38,257             $ 47,723
                                                 =============================

Supplemental cash flow information:
  Interest paid                                  $  2,922             $  2,760
  Income taxes paid                                   813                  417
</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
                              December 31, 1998

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 December 31, 1998 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 December 31, 1998, the Bank had outstanding commitments to originate 
loans amounting to approximately $9.1 million, and unadvanced funds on 
construction loans and lines of credit amounting to approximately $294,000 
and $7.0 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 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 six months ended December 31, 1998 were 
$.16 and $.32, respectively on a basic and diluted basis.  Earnings per 
share data is not presented for the three and six  months ended December 31, 
1997 since there were no outstanding shares of common stock until the 
Conversion on January 8, 1998.

5)  Stock Repurchase

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.

6)  Recent Accounting Pronouncement

On 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.

7)  Investment Securities

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

<TABLE>
<CAPTION>
                                     December 31, 1998          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               $12,290      $12,350      $11,540      $11,527
  Marketable equity securities        2,507        3,447        2,544        3,222
                                    ----------------------------------------------
      Total                         $14,797      $15,797      $14,084      $14,749
                                    ==============================================

Securities held to maturity:
  U.S. Government & Federal
   Agency Obligations               $ 1,999      $ 2,011      $ 9,498      $ 9,510
  Other bonds & obligations           2,504        2,516        2,508        2,520
                                    ----------------------------------------------
      Total                         $ 4,503      $ 4,527      $12,006      $12,030
                                    ==============================================
</TABLE>

8)  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>
                                        December 31, 1998            June 30, 1998
                                      --------------------      --------------------
                                       Amount      Percent       Amount      Percent
                                       ------      -------       ------      -------
                                                  (Dollars in Thousands)

<S>                                   <C>           <C>         <C>           <C>
Residential mortgage loans            $106,467       74.4%      $106,412       76.8%
Commercial real estate loans            27,985       19.5         24,475       17.7
Commercial loans                         5,431        3.8          4,579        3.3
Consumer loans                           1,746        1.2          1,787        1.3
Home equity loans                        1,509        1.1          1,716        1.2
Construction loans                       1,560        1.1          1,260        0.9
                                      ---------------------------------------------
Total loans                            144,698      101.1        140,229      101.2

Less 
Deferred loan origination fees               6          -             17          -
Unadvanced principal                       294        0.2            383        0.3
Allowance for loan losses                1,311        0.9          1,236        0.9
                                      ---------------------------------------------
                                      $143,087      100.0%      $138,593      100.0%
                                      =============================================
</TABLE>

9)  Allowance for Loan Losses

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

<TABLE>
<CAPTION>
                                         Six                  Six
                                     Months Ended         Months Ended
                                   December 31, 1998    December 31, 1997
                                   -----------------    -----------------
                                            (Dollars in Thousands)

<S>                                    <C>                  <C>
Average loans, net                     $140,910             $119,378
                                       =============================
Period-end net loans                   $143,087             $122,941
                                       =============================

Allowance for loan losses at
 beginning of period                   $  1,236             $    977
Provision for loan losses                    90                  150
Plus recoveries                               2                   12
Loans charged-off                           (17)                  (1)
                                       -----------------------------
Allowance for loan losses at end
 of period                             $  1,311             $  1,138
                                       =============================

Non-performing loans                   $      2             $    361
                                       =============================

Ratios 
  Allowance for loan losses to
   period end net loans                    0.92%                0.93%
  Allowance for loan losses to
   non-performing loans                       -               315.24%
  Net charge-offs (recoveries) to
   average loans, net                      0.02%               (0.02)%
</TABLE>

10)  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>
                                   December 31, 1998           June 30, 1998
                                 --------------------      --------------------
Deposits:                         Amount      Percent       Amount      Percent
                                  ------      -------       ------      -------
                                              (Dollars in Thousands)

<S>                              <C>           <C>         <C>          <C>
Savings deposits                 $ 40,509       26.5%      $40,460       28.0%
NOW accounts                       28,616       18.7        34,208       23.6
Money market deposits               6,656        4.4         6,256        4.3
Demand deposits                     7,182        4.7         6,603        4.6
Certificates of deposits           69,859       45.7        57,239       39.5
                                 --------------------------------------------
Total deposits                   $152,822      100.0%     $144,766      100.0%
                                 ============================================

Borrowed Funds: 
Advances from Federal Home
 Loan Bank of Boston:
Maturities less than one year    $  2,300       11.4%     $  1,125        6.8%
Maturities greater than one
 year                              17,792       88.6        15,380        93.2
                                 ---------------------------------------------

Total borrowed funds             $ 20,092      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
                              December 31, 1998

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 DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                  Three Months Ended December 31, 1998    Three Months Ended December 31, 1997
                                  ------------------------------------    ------------------------------------
                                   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                   $142,007       $2,811        7.92%      $121,425       $2,491        8.21%
Investments                          21,687          294        5.42%        20,324          276        5.43%
Other earning assets                 20,020          243        4.86%        11,865          170        5.73%
                                   --------       ------                   --------       ------

      Total interest-earning
       assets                       183,714        3,348        7.29%       153,614        2,937        7.65%
                                                  ------                                  ------

Cash and due from banks               3,936                                   3,150
Other assets                          6,193                                   6,085
                                   --------                                --------

      Total assets                 $193,843                                $162,849
                                   ========                                ========

INTEREST-BEARING LIABILITIES:
Regular and other deposits         $ 40,544          250        2.47%      $ 46,786          306        2.62%
Now accounts                         23,588           94        1.59%        20,696           84        1.62%
Money market deposits                 6,381           39        2.44%         6,669           44        2.64%
Certificates of deposit              61,541          836        5.43%        58,366          818        5.61%
                                    -------       ------                   --------       ------

      Total interest-bearing
       deposits                     132,054        1,219        3.69%       132,517        1,252        3.78%

FHLB borrowings                      18,624          277        5.95%        11,523          180        6.25%
                                   --------       ------                   --------       ------

      Total interest-bearing
       liabilities                  150,678        1,496        3.97%       144,040        1,432        3.98%
                                                  ------                                  ------

Demand deposit accounts               7,170                                   5,551

Other liabilities                     1,267                                   1,003
                                   --------                                --------

      Total liabilities             159,115                                 150,594

Stockholders' equity                 34,728                                  12,255
                                   --------                                --------

      Total liabilities and
       stockholders' equity        $193,843                                $162,849
                                   ========                                ========

Net interest income                               $1,852                                  $1,505
                                                  ======                                  ======

Interest rate spread                                           3.32%                                    3.67%

Net interest margin                                            4.03%                                    3.92%

Interest earning assets/
 interest-bearing liabilities                                  1.22x                                    1.07x
</TABLE>


MYSTIC FINANCIAL, INC. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS
SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997 

<TABLE>
<CAPTION>
                                   Six Months Ended December 31, 1998      Six Months Ended December 31, 1997
                                   ----------------------------------      ----------------------------------
                                   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                   $140,910       $5,584        7.93%      $119,378       $4,886        8.19%
Investments                          23,400          642        5.49%        20,276          570        5.62%
Other earning assets                 17,691          447        5.05%         9,710          266        5.48%
                                   --------       ------                   --------       ------
      Total interest-earning
       assets                       182,001        6,673        7.33%       149,364        5,722        7.66%
                                                  ------                                  ------

Cash and due from banks               3,767                                   2,924
Other assets                          6,188                                   5,990
                                   --------                                --------

      Total assets                 $191,956                                $158,278
                                   ========                                ========

INTEREST-BEARING LIABILITIES:
Regular and other deposits         $ 40,912          525        2.57%      $ 43,815          537        2.45%
Now accounts                         23,133          184        1.59%        19,896          170        1.71%
Money market deposits                 6,426           81        2.52%         6,595           87        2.64%
Certificates of deposit              60,520        1,658        5.48%        58,682        1,694        5.77%
                                   --------       ------                   --------       ------

      Total interest-bearing
       deposits                     130,991        2,448        3.74%       128,988        2,488        3.86%

FHLB borrowings                      17,612          530        6.02%        10,711          335        6.26%
                                   --------       ------                   --------       ------

      Total interest-bearing
       liabilities                  148,603        2,978        4.01%       139,699        2,823        4.04%
                                                  ------                                  ------

Demand deposit accounts               7,133                                   5,533

Other liabilities                     1,164                                     920
                                   --------                                --------

      Total liabilities             156,900                                 146,152

Stockholders' equity                 35,056                                  12,126
                                   --------                                --------

      Total liabilities and
       stockholders' equity        $191,956                                $158,278
                                   ========                                ========

Net interest income                               $3,695                                  $2,899
                                                  ======                                  ======

Interest rate spread                                            3.32%                                   3.62%

Net interest margin                                             4.06%                                   3.88%

Interest earning assets/
 interest-bearing liabilities                                   1.22x                                   1.07x
</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 December 31,
                                                     1998 vs 1997
                                                  Increase (decrease)
                                            -------------------------------
                                                  Due to
                                            -------------------
                                             Rate        Volume      Total
                                             ----        ------      -----
                                                     (In Thousands)

<S>                                         <C>          <C>         <C>
Interest and dividend income:
Loans, net                                  $  (90)      $  410      $ 320
Investments                                      -           18         18
Other earning assets                           (29)         102         73
                                            ------------------------------
Total                                         (119)         530        411
                                            ------------------------------
Interest expense:
Deposits                                       (30)          (3)       (33)
Borrowed funds                                  (9)         106         97
                                            ------------------------------
Total                                          (39)         103         64
                                            ------------------------------
Change in net interest income               $  (80)      $  427      $ 347
                                            ==============================
</TABLE>

<TABLE>
<CAPTION>
                                             Six Months Ended December 31,
                                                     1998 vs. 1997
                                                  Increase (decrease)
                                             -----------------------------
                                                  Due to
                                             ------------------
                                             Rate        Volume      Total
                                             ----        ------      -----
                                                     (In Thousands)

<S>                                         <C>          <C>         <C>
Interest and dividend income:
Loans, net                                  $ (159)      $  857      $ 698
Investments                                    (14)                     72
Other earning assets                           (22)         203        181
                                            ------------------------------
Total                                         (195)       1,146        951
                                            ------------------------------
Interest expense:
Deposits                                       (79)          39        (40)
Borrowed funds                                 (13)         208        195
                                            ------------------------------
                                               (92)         247        155
                                            ------------------------------
Change in net interest income               $ (103)      $  899      $ 796
                                            ==============================
</TABLE>

Financial Condition and Results of Operations

Comparison of Financial Condition at December 31, 1998 and June 30, 1998

      The Company's total assets amounted to $209.5 million at December 31, 
1998 compared to $199.0 million at June 30, 1998, an increase of $10.4 
million or 5.2%.  The increase in total assets is a result of an increase in 
cash and cash equivalents and continued loan growth, partially offset by a 
decrease in investment securities.  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 $38.3 million at December 31, 
1998 from $26.0 million at June 30, 1998, an increase of $12.3 million or 
47.3%. 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.  The decrease in investment securities of $6.5 
million or 24.1% to $20.3 million at December 31, 1998 from $26.8 million at 
June 30, 1998 also caused cash and cash equivalents to increase as the 
Company maintained a higher level of liquidity.

      Net loans increased by $4.5 million or 3.2% to $143.1 million or 68.3% 
of  total assets at December 31, 1998 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 $8.1 million or 5.6% to $152.8 million at 
December 31, 1998 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 
December 31, 1998 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 $871,000 to $35.3 million at 
December 31, 1998 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 $264,000, offset by net income of 
$824,000 a decrease in the loan due from the Employeee Stock Ownership Plan 
due to the first annual repayment of principal of $319,000, and an increase 
in the net unrealized gain on securities available for sale of $217,000.

      Comparison of the Operating Results for the Three and Six Months Ended 
December 31, 1998 and 1997

      Net Income.  Net income was $409,000 and $824,000 for the three and 
six months ended December 31, 1998, respectively, compared to $236,000 and 
$591,000 for the three and six months ended December 31, 1997, respectively. 
Return on average assets was .84% and .86% for the three and six months 
ended December 31, 1998, respectively, compared to .58% and .75% for the 
three and six months ended December 31, 1997, respectively.  Return on 
average equity was 4.71% and 4.70% for the three and six months ended 
December 31, 1998, respectively, compared to 7.70% and 9.75% for the three 
and six months ended December 31, 1997, respectively. The increase in the 
return on average assets and the decrease in the return on average equity 
are primarily due to the conversion. 

      The increase in net income for the three months ended December 31, 
1998 compared to the three months ended December 31, 1997 was attributable 
to an increase in net interest income of $347,000, an increase in other 
income of $117,000, and a decrease of $50,000 in provision for loan losses, 
which were partially offset by an increase in operating expenses of $228,000 
and an increase in the provision for income taxes of $113,000.  The increase 
in net income for the six months ended December 31, 1998 compared to the six 
months ended December 31, 1997 was attributable to an increase in net 
interest income of $796,000, an increase in other income of $15,000, and a 
decrease of $60,000 in provision for loan losses, which were partially 
offset by an increase in operating expenses of $499,000 and an increase in 
the provision for income taxes of $139,000.  

      Interest Income.  Total interest and dividend income increased by 
$411,000 or 14.0% to $3.3 million for the three months ended December 31, 
1998 from $2.9 million for the three months ended December 31, 1997.  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.  The average balance of net loans 
for the three months ended December 31, 1998 was $142.0 million compared to 
$121.4 million for the three months ended December 31, 1997.  The average 
yield on net loans was 7.92% for the three months ended December 31, 1998 
compared to 8.21% for the three months ended December 31, 1997.  

      The average balance of investment securities for the three months 
ended December 31, 1998 was $21.7 million compared to $20.3 million for the 
three months ended December 31, 1997.  The average yield on investment 
securities was 5.42% for the three months ended December 31, 1998 compared 
to 5.43% for the three months ended December 31, 1997.   The average balance 
of other earning assets for the three months ended December 31, 1998 was 
$20.0 million compared to $11.9 million for the three months ended December 
31, 1997.  The average yield on other earning assets was 4.86% for the three 
months ended December 31, 1998 compared to 5.73% for the three months ended 
December 31, 1997.  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.

      Total interest and dividend income increased by $951,000 or 16.6% to 
$6.7 million for the six months ended December 31, 1998 from $5.7 million 
for the six months ended December 31, 1997.  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. 
 The average balance of net loans for the six months ended December 31, 1998 
was $140.9 million compared to $119.4 million for the six months ended 
December 31, 1997.  The average yield on net loans was 7.93% for the six 
months ended December 31, 1998 compared to 8.19% for the six months ended 
December 31, 1997.  

      The average balance of investment securities for the six months ended 
December 31, 1998 was $23.4 million compared to $20.3 million for the six 
months ended December 31, 1997.  The average yield on investment securities 
was 5.49% for the six months ended December 31, 1998 compared to 5.62% for 
the six months ended December 31, 1997.   The average balance of other 
earning assets for the six months ended December 31, 1998 was $17.7 million 
compared to $9.7 million for the six months ended December 31, 1997.  The 
average yield on other earning assets was 5.05% for the six months ended 
December 31, 1998 compared to 5.48% for the six months ended December 31, 
1997.  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 $64,000 or 4.5% 
to $1.5 million for the three months ended December 31, 1998 from $1.4 
million for the three months ended December 31, 1997.  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 decreased by $463,000 or 0.4% to 
$132.1 million while the average rate decreased nine basis points to 3.69% 
from 3.78% for the three months ended December 31, 1998.  Average interest-
bearing deposits were abnormally high during the three months ended December 
31, 1997 because they included deposits received by the Bank as stock 
subscription deposits.  Average borrowings increased by $7.1 million to 
$18.6 million for the three months ended December 31, 1998 from $11.5 
million while the average rate decreased 30 basis points to 5.95% from 6.25% 
for the three months ended December 31, 1997.

      Total interest expense increased by $155,000 or 5.5% to $3.0 million 
for the six months ended December 31, 1998 from $2.8 million for the six 
months ended December 31, 1997.  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 $2.0 million or 1.6% to 
$131.0 million while the average rate decreased 12 basis points to 3.74% 
from 3.86% for the six months ended December 31, 1998.  Average borrowings 
increased by $6.9 million to $17.6 million for the six months ended December 
31, 1998 from $10.7 million while the average rate decreased 24 basis points 
to 6.02% from 6.26% for the six months ended December 31, 1997.

      Net Interest Income.  Net interest income for the three months ended 
December 31, 1998 was $1.9 million as compared to $1.5 million for the three 
months ended December 31, 1997.  The $347,000 or 23.1% increase can be 
attributed to a combination of the $411,000 increase in interest and 
dividend income and the $64,000 increase in interest expense on deposits and 
borrowed funds.  The average yield on interest earning assets decreased 36 
basis points to 7.29% for the three months ended December 31, 1998 from 
7.65% for the three months ended December 31, 1997, while the average cost 
on interest-bearing liabilities decreased by one basis point to 3.97% for 
the three months ended December 31, 1998 from 3.98% for the three months 
ended December 31, 1997.  As a result, the interest rate spread decreased to 
3.32% for the three months ended December 31, 1998 from 3.67% for the three 
months ended December 31, 1997.  The interest rate spread also declined due 
to the receipt of net conversion proceeds which have been invested in cash 
and cash equivalents and investment securities at interest rates lower than 
the Company's average yield on loans.   

      Net interest income for the six months ended December 31, 1998 was 
$3.7 million as compared to $2.9 million for the six months ended December 
31, 1997.  The $796,000 or 27.5% increase can be attributed to a combination 
of the $951,000 increase in interest and dividend income and the $155,000 
increase in interest expense on deposits and borrowed funds.  The average 
yield on interest earning assets decreased 33 basis points to 7.33% for the 
six months ended December 31, 1998 from 7.66% for the six months ended 
December 31, 1997, while the average cost on interest-bearing liabilities 
decreased by three basis points to 4.01% for the six months ended December 
31, 1998 from 4.04% for the six months ended December 31, 1997.  As a 
result, the interest rate spread decreased to 3.32% for the six months ended 
December 31, 1998 from 3.62% for the six months ended December 31, 1997.  
The interest rate spread also declined due to the receipt of net conversion 
proceeds which have been invested in cash and cash equivalents and 
investment securities at interest rates lower than the Company's average 
yield on loans.

      Provision for Loan Losses.  The provision for loan losses for the 
three and six months ended December 31, 1998 was $30,000 and $90,000, 
respectively, compared to $80,000 and $150,000 for the three and six months 
ended December 31, 1997, respectively.  This decrease reflects the decrease 
in non-performing loans at December 31, 1998 compared to December 31, 1997. 
 At December 31, 1998, the balance of the allowance for loan losses was 
$1,311,000 or .92% of net loans.  During the six months ended December 31, 
1998, $17,000 was charged against the allowance for loan losses while $2,000 
in recoveries was credited to the allowance for loan losses.   At December 
31, 1997, the balance of the allowance for loan losses was $1,138,000 or 
 .93% of net loans.  During the six months ended December 31, 1997, $1,000 
was charged against the allowance for loan losses while $12,000 in 
recoveries was credited to the allowance for loan losses.

      Other Income.  Other income was $320,000 for the three months ended 
December 31, 1998 compared to $203,000 for the three months ended December 
31, 1997.  The $117,000 increase was primarily the result of a $64,000 
increase in the gain on the sales of mortgage loans and an increase in 
miscellaneous income of $49,000.    Other income was $563,000 for the six 
months ended December 31, 1998 compared to $548,000 for the six months ended 
December 31, 1997.  The $15,000 increase was primarily the result of a 
$66,000 increase in the gain on the sales of mortgage loans and an increase 
in miscellaneous income of $17,000, offset by a decrease in the gain on the 
sales of investment securities of $77,000.  

      Operating Expenses.  Operating expenses increased by $228,000 or 18.5% 
to $1.5 million for the three months ended December 31, 1998 from $1.2 
million for the three months ended December 31, 1997.   Salaries and 
employee benefits increased by $45,000.  Of this amount, an increase of 
$75,000 attributable to the Company's adoption of an Employee Stock 
Ownership Plan ("ESOP") and $68,000 attributable to the adoption of 
supplemental benefits for the Company's Chief Executive officer were offset 
by reductions in staff salaries of $81,000 and other decreases of $22,000.  
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 $23,000 due 
to the opening of a new branch office in late November 1998 in Lexington, 
Massachusetts.  An increase in other general and administrative expenses of 
$147,000 was caused by higher professional fees and liability insurance 
costs from operating as a publicly held stock institution and promotional 
costs associated with the opening of the new Lexington office.

      Operating expenses increased by $499,000 or 21.7% to $2.8 million for 
the six months ended December 31, 1998 from $2.3 million for the six months 
ended December 31, 1997.  Salaries and employee benefits increased by 
$224,000, of which $156,000 is attributable to the Company's adoption of an 
Employee Stock Ownership Plan ("ESOP").  Salaries and employee benefits also 
increased by $50,000 due to accruals for supplemental retirement benefits 
and a Benefit Restoration Plan for the Company's Chief Executive Officer.  
Salary and employee benefits also increased because of higher commission 
payments to residential loan originators as a result of higher volumes of 
lending activity.  An increase in other general and administrative expenses 
of $263,000 was caused by higher professional fees and liability insurance 
costs from operating as a publicly held stock institution and promotional 
costs associated with the opening of the Lexington office.  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 Company'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 Company 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 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 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 December 31, 1998 was 38.2%.

      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 December 31, 1998, the Company had borrowings of $20.1 
million from the FHLBB.

      At December 31, 1998, the Company had $9.1 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 $45.3 million at December 31, 1998.  Based upon historical 
experience, management believes that a significant portion of such deposits 
will remain with the Bank.

      At December 31, 1998, 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.  It is anticipated that all reprogramming efforts were 
nearly 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 $56,000 on Year 2000 related costs to 
date and estimates that it will spend an additional $100,000 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 a 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 its Annual Meeting of Shareholders ("Meeting") on 
October 21, 1998.  All of the proposals submitted to the shareholders at the 
Meeting were approved.  The proposals submitted to shareholders and the 
tabulation of votes for each proposal is as follows: 

      1.    Election of four candidates to the Board of Directors, three to 
            serve for a term of three years and one to serve a term of one 
            year.

      The number of votes cast with respect to this matter was as follows:


<TABLE>
<CAPTION>
Nominee                          For        Withheld     Broker Non-Votes
-------                          ---        --------     ----------------

<S>                           <C>            <C>             <C>
Lorraine P. Silva             2,051,772      23,562          94,652
John A. Hackett               2,050,512      24,822          94,652
Julie Bernardin               2,050,217      25,117          94,652
Frederick N. Dello Russo      2,048,412      26,922          94,652
</TABLE>

      2.    Ratification of the appointment of Wolf & Company, P.C. as 
            independent auditors for fiscal year ending June 30, 1999.

      The number of votes cast with respect to this matter was as follows:

<TABLE>
<CAPTION>
         For        Against      Abstained      Broker Non-Votes
         ---        -------      ---------      ----------------

      <C>            <C>           <C>              <C>
      2,057,087      8,700         9,547            94,652
</TABLE>

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: February 12, 1999                By:  /s/ Robert H. Surabian
                                            -------------------------------
                                            Robert H. Surabian
                                            President and Chief Executive 
                                            Officer

Date: February 12, 1999                By:  /s/ Ralph W. Dunham
                                            -------------------------------
                                            Ralph W. Dunham
                                            Executive Vice-President, Chief 
                                            Financial Officer, and Treasurer