SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended June 30, 2001
                               -------------

|_|  Transition  report  pursuant  to  section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

For the transition period from                 to
                               ---------------    ---------------

SEC File Number:  000-25009
                  ---------

                              SKIBO FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  United States                            25-1820465
---------------------------------------------        ----------------------
         (State or other jurisdiction of                (I.R.S. Employer
         incorporation or organization)                 Identification No.)

242 East Main Street, Carnegie, Pennsylvania                  15106
--------------------------------------------         ------------------------
  (Address of principal executive offices)                  (Zip Code)

                                 (412) 276-2424
          ----------------------------------------------------------------------
              (Registrant's telephone number, including area code)


         Check  whether the  registrant:  (1) filed all  reports  required to be
filed by Sections 13 or 15(d) of the Securities  Exchange Act of 1934 subsequent
to the preceding 12 months (or for such shorter  period that the  registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.  Yes   X    No
                                        -----     -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

                  Number of shares outstanding of common stock
                               as of July 31, 2001


$0.10 Par Value Common Stock                             3,150,333  Shares
----------------------------                             -----------------
        Class                                               Outstanding

            Transitional Small Business Disclosure Format (check one)
                           Yes         No  X
                              ------     ------

<PAGE>


                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----



PART I.           FINANCIAL INFORMATION
-------           ---------------------


Item 1.     Financial Statements


                  Consolidated Statements of Financial Condition (As of
                  June 30, 2001 (unaudited) and March 31, 2001)................1

                  Consolidated Statements of Income (For the three
                  months ended June 30, 2001 and 2000 (unaudited)).............2

                  Consolidated Statement of Stockholders' Equity (For the
                  three months ended June 30, 2001 (unaudited))................3

                  Consolidated Statements of Cash Flows (For the three
                  months ended June 30, 2001 and 2000 (unaudited)).............4

                  Notes to Consolidated Financial Statements...................5


Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations................................7



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


Item 1.     Legal Proceedings.................................................10
Item 2.     Changes in Securities.............................................10
Item 3.     Defaults Upon Senior Securities...................................10
Item 4.     Submission of Matters to a Vote of Security-Holders...............10
Item 5.     Other Information.................................................10
Item 6.     Exhibits and Reports on Form 8-K..................................10


Signatures

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                      June 30,   March 31,
                                                                        2001       2001
                                                                     ---------   ---------
                                                                    (Unaudited)
<S>                                                               <C>          <C>
                    ASSETS
                    ------
Cash and amounts due from depository institutions                   $     950    $   1,026
Interest-bearing deposits with other institutions                       8,651        8,186
Investment securities:
     Held-to-maturity (market value $24,727 and $25,972)               25,102       26,084
Mortgage-backed securities:
     Held-to-maturity (market value $59,116 and $56,551)               58,539       55,907
Loans receivable, net                                                  49,517       49,798
Accrued interest receivable:
     Investment securities                                                396          496
     Mortgage-backed securities                                           426          411
     Loans receivable                                                     434          452
Federal Home Loan Bank stock, at cost                                   2,615        2,615
Premises and equipment, net                                               563          577
Prepaid expenses and other assets                                       4,398        4,360
                                                                    ---------    ---------
        Total Assets                                                $ 151,591    $ 149,912
                                                                    =========    =========

               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------

Liabilities:
     Deposits                                                       $  75,065    $  73,399
     Federal Home Loan Bank advances                                   48,000       48,000
     Advances from borrowers for taxes and insurance                      138          107
     Accrued expenses and other liabilities                             3,468        3,304
                                                                    ---------    ---------
        Total Liabilities                                             126,671      124,810


Stockholders' Equity:
     Preferred stock, 5,000,000 shares authorized; none issued             --           --
     Common stock, $0.10 par value; 10,000,000 shares authorized;
        3,449,974 shares issued                                           345          345
     Additional paid-in capital                                         9,757        9,745
     Treasury stock, at cost (310,723 shares at June 30, 2001
         and 304,694 shares at March 31, 2001)(1)                      (2,132)      (2,087)
     Unearned Employee Stock Ownership Plan (ESOP) shares                 (41)         (91)
     Unearned Restricted Stock Plan (RSP) shares                          (75)        (100)
     Retained earnings, substantially restricted                       17,066       17,290
                                                                    ---------    ---------
        Total Stockholders' Equity                                     24,920       25,102
                                                                    ---------    ---------

        Total Liabilities and Stockholders' Equity                  $ 151,591    $ 149,912
                                                                    =========    =========
</TABLE>


(1)Included are shares held by the Bank's RSP  totaling  11,082 at June 30, 2001
   and 10,483 at March 31, 2001, respectively.

See accompanying notes to consolidated financial statements.

                                        1
<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                        Consolidated Statements of Income

                For the Three Months Ended June 30, 2001 and 2000

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                        2001         2000
                                                                    ----------   ----------
                                                                          (Unaudited)
<S>                                                               <C>          <C>
Interest income:
     Loans receivable                                               $      899   $    1,025
     Mortgage-backed securities                                            965        1,007
      Investment securities                                                423          463
     Other                                                                 138           66
                                                                    ----------   ----------
            Total interest income                                        2,425        2,561

Interest expense:
     Savings deposits                                                      848          815
     Federal Home Loan Bank advances                                       663          672
                                                                    ----------   ----------
           Total interest expense                                        1,511        1,487
                                                                    ----------   ----------

           Net interest income                                             914        1,074

Provision for loan losses                                                   --           --
                                                                    ----------   ----------
           Net interest income after provision for loan losses             914        1,074
Other income:
     Fees and service charges                                               10            8
     Other                                                                  32           18
                                                                    ----------   ----------
           Total other income                                               42           26

Other expenses:
     Compensation and employee benefits                                    596          460
     Premises and occupancy costs                                           48           53
     Federal insurance premiums                                              4            4
     Other operating expenses                                               85           88
                                                                    ----------   ----------
           Total other expenses                                            733          605
                                                                    ----------   ----------

             Income before income taxes                                    223          495

Provision for income taxes                                                  85          212
                                                                    ----------   ----------
           Net income                                                      138          283

Other comprehensive income:
     Unrealized gain on securities available-for-sale, net of tax           --           --
                                                                    ----------   ----------
           Total comprehensive income                               $      138   $      283
                                                                    ==========   ==========

Basic earnings per share                                            $      .04   $      .09
Diluted earnings per share                                          $      .04   $      .09

Weighted average shares outstanding - Basic                          3,130,993    3,230,863
Weighted average shares outstanding - Diluted                        3,155,334    3,230,863

</TABLE>

 See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity

              For the Three Months Ended June 30, 2001 (unaudited)

              (Dollar amounts in thousands, except per share data)



<TABLE>
<CAPTION>
                                                  Additional               Unearned   Unearned
                                       Common        Paid-in    Treasury       ESOP        RSP  Retained
                                        Stock        Capital       Stock     Shares     Shares  Earnings     Total
                                      -----------------------------------------------------------------------------
<S>                                   <C>          <C>       <C>           <C>        <C>      <C>       <C>
Balance at March 31, 2001                $345         $9,745     $(2,087)      $(91)     $(100)  $17,290   $25,102

Cash dividends declared net
 ($.12 per share regular,
 $.20 per share special)                   --             --          --         --         --      (362)     (362)

Excess of fair value above cost of
 ESOP shares released or
  committed to be released                 --             12          --         --         --        --        12

Amortization of ESOP liability             --             --          --         50         --        --        50

Amortization of RSP liability              --             --          --         --         25        --        25

Treasury stock purchased,
 at cost (6,029 shares)                    --             --         (45)        --         --        --       (45)

Net income                                 --             --          --         --         --       138       138
                                      -----------------------------------------------------------------------------

Balance at June 30, 2001                 $345         $9,757     $(2,132)      $(41)     $ (75)  $17,066   $24,920
                                      =============================================================================

</TABLE>

  See accompanying notes to consolidated financial statements.

                                        3

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                For the Three Months Ended June 30, 2001 and 2000

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                  2001       2000
                                                                                 -------    -------
                                                                                     (Unaudited)
<S>                                                                            <C>        <C>
Operating activities:
     Net income                                                                  $   138    $   283
     Adjustments to reconcile net income to net cash
        (used in) provided by operating activities:
           Depreciation                                                               16         19
           Compensation expense-ESOP and RSP                                          87         70
           Net amortization of premiums and discounts                                (49)        25
           Decrease in accrued interest receivable                                   103         92
           Increase in prepaid expenses                                              (38)      (470)
           Increase in accrued interest payable                                      130        137
           Increase (decrease) in accrued income taxes                                54        (53)
           Other, net                                                                (20)       389
                                                                                 -------    -------
             Net cash provided by operating activities                               421        492
                                                                                 -------    -------

Investing activities:
     Purchases of premises and equipment                                              (2)        (1)
     Purchases of investment securities held-to maturity                            (131)      (300)
     Purchases of mortgage-backed securities held-to-maturity                     (7,639)    (1,459)
     Proceeds from maturities/calls and principal repayments of:
       Investment securities held-to-maturity                                      1,113        264
       Mortgage-backed securities held-to-maturity                                 5,028      2,468
     Loans purchased                                                              (3,292)      (653)
     Net principal repayments on loans                                             3,601      1,641
                                                                                 -------    -------
             Net cash provided by (used in) investing activities                  (1,322)     1,960
                                                                                 -------    -------

Financing activities:
     Net increase (decrease) in savings deposits                                   1,666     (1,283)
     Proceeds from Federal Home Loan Bank advances                                    --      8,500
     Net increase in mortgage escrow                                                  31         52
     Treasury stock purchased                                                        (45)      (441)
     Cash dividends paid                                                            (362)      (182)
                                                                                 -------    -------
             Net cash provided by (used in) financing activities                   1,290     (2,354)
                                                                                 -------    -------

Net increase in cash and cash equivalents                                            389         98
Cash and cash equivalents, beginning of period                                     9,212      1,726
                                                                                 -------    -------
Cash and cash equivalents, end of period                                         $ 9,601    $ 1,824
                                                                                 =======    =======

Supplemental disclosures of cash flow information: Cash paid during the period
     for:
       Interest                                                                  $ 1,381    $ 1,349
                                                                                 =======    =======

       Income taxes                                                              $    67    $   346
                                                                                 =======    =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                        4

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)



NOTE 1 -  Basis of Presentation and Principles of Consolidation
          -----------------------------------------------------

The  accompanying   unaudited  consolidated  financial  statements  include  the
accounts of Skibo Financial  Corp.,  its wholly- owned subsidiary First Carnegie
Deposit (the "Bank"),  and the Bank's  wholly- owned  subsidiary,  Fedcar,  Inc.
Fedcar, Inc. is a service corporation that is currently inactive.

These  statements  have been prepared in accordance with  instructions  for Form
10-QSB.  Accordingly,  they do not include all of the  information and footnotes
required by generally  accepted  accounting  principles  for complete  financial
statements.   However,  such  information  presented  reflects  all  adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
the  Company's  management,  necessary  for a fair  statement of results for the
interim period. All significant intercompany transactions and balances have been
eliminated in consolidation.

The  results of  operations  for the three  months  ended June 30,  2001 are not
necessarily  indicative  of the results to be expected for the year ending March
31, 2002 or any other period. The unaudited  consolidated  financial  statements
and notes  thereto  should be read in  conjunction  with the  audited  financial
statements and notes thereto for the year ended March 31, 2001.

NOTE 2 -  Dividends on Common Stock
          -------------------------

On May 14,  2001,  the Board of  Directors  of the Company  declared a $0.20 per
share special cash dividend on the Company's outstanding shares of common stock,
payable to stockholders of record as of May 24, 2001. Skibo  Bancshares,  M.H.C.
(the "M.H.C.") waived the receipt of dividends on its 1,897,500 shares. The cash
dividends on the outstanding  shares held by persons other than the M.H.C.  were
paid on June 7, 2001.  On June 14,  2001,  the Board of Directors of the Company
declared a $0.12 per share regular cash  dividend on the  Company's  outstanding
shares of common stock,  payable to  stockholders of record as of June 29, 2001.
The M.H.C.  waived the receipt of dividends on its  1,897,500  shares.  The cash
dividends on the outstanding  shares held by persons other than the M.H.C.  were
paid on July 13,  2001.  Under the  interim  final  rule of the Office of Thrift
Supervision  (the "OTS") effective July 12, 2000, any waiver of dividends by the
M.H.C.  will no longer  result in the OTS  requiring an  adjustment to the ratio
pursuant to which shares of Company  common stock are  exchanged for shares of a
stock holding company should the M.H.C. convert from the mutual to stock form of
organization.  Such an  adjustment  would  have had the effect of  diluting  the
minority stockholders of the Company.

Skibo Financial  Corp.'s common stock is currently listed on the Nasdaq SmallCap
Market,  traded under the symbol of "SKBO" and listed in the Wall Street Journal
as "SkiboFn".

NOTE 3 -  Comprehensive Income
          --------------------

For the  three  months  ended  June  30,  2001 and  2000,  the  Company's  total
comprehensive   income  was   $138,000   and   $283,000,   respectively.   Total
comprehensive income is comprised of net income and other comprehensive  income.
For both three month periods, there was no other comprehensive income.

NOTE 4 -  Earnings Per Share (EPS)
          ------------------------

Basic EPS is computed by dividing net income  applicable  to common stock by the
weighted average number of common shares outstanding during the period,  without
considering any dilutive  items.  Diluted EPS is computed by dividing net income
applicable to common stock by the weighted  average  number of common shares and
common stock  equivalents for items that are dilutive,  net of shares assumed to
be  repurchased  using the treasury  stock method at the average share price for
the Company's  common stock during the period.  Common stock  equivalents  arise
from the assumed  conversion  of  outstanding  stock  options and  unvested  RSP
shares.

                                        5
<PAGE>
                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

The  computation  of basic and diluted  earnings per share is shown in the table
below:

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                     ---------------------------
                                                      June 30,          June 30,
                                                        2001              2000
                                                     ----------       ----------
<S>                                                <C>              <C>
Basic EPS computation:
 Numerator-Net Income                                $  138,000       $  283,000
 Denominator-Wt Avg common shares outstanding         3,130,993        3,230,863
Basic EPS                                            $      .04       $      .09
                                                            ===              ===

Diluted EPS computation:
 Numerator-Net Income                                $  138,000       $  283,000
                                                     ==========       ==========
 Denominator-Wt Avg common shares outstanding         3,130,993        3,230,863
 Dilutive Stock Options                                  24,341               --
 Dilutive Unvested RSP                                       --               --
                                                      ---------       ----------
 Weighted avg common shares and common stock
   equivalents                                        3,155,334        3,230,863
Diluted EPS                                          $      .04       $      .09
                                                            ===              ===
</TABLE>

For the  quarters  ended June 30,  2001 and 2000,  7,683 and 15,366 RSP  shares,
respectively,  were  excluded  from the  diluted  EPS  computation  due to their
anti-dilutive  effect.  Shares  outstanding  for the three months ended June 30,
2001 and 2000 do not include  ESOP shares that were  unallocated  in  accordance
with Statement of Position  ("SOP") 93-6,  "Employers'  Accounting for Employees
Stock Ownership Plans".  Unallocated ESOP shares amounted to 6,078 and 33,046 at
June 30, 2001 and 2000, respectively.

NOTE 5 -  Income Taxes
          ------------

The Company joins with its wholly owned subsidiary,  First Carnegie Deposit,  in
filing a  consolidated  federal  income tax return and accounts for income taxes
using the asset and liability  method.  The objective of the asset and liability
method is to  establish  deferred  tax  assets  and  liabilities  for  temporary
differences  between  the  financial  reporting  and tax basis of the  Company's
assets and liabilities  based on enacted tax rates expected to be in effect when
such amounts are realized and settled.

                                        6
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company's  results of operations  are primarily  dependent upon net interest
income,   which  is  the  difference  between  the  interest  income  earned  on
interest-earning  assets,  primarily  loans,   mortgage-backed  securities,  and
investments, and the interest expense on interest-bearing liabilities, primarily
deposits and borrowings.  Net interest income may be affected  significantly  by
general economic and competitive conditions and policies of regulatory agencies,
particularly  those  with  respect  to market  interest  rates.  The  results of
operations  are  also  significantly  influenced  by the  level  of  noninterest
expenses,  such as employee salaries and benefits,  noninterest  income, such as
loan-related  fees  and  fees on  deposit-related  services,  and the  Company's
provision for loan losses.

The  Management  Discussion  and Analysis  section of this Form 10-QSB  contains
certain  forward-looking  statements  (as  defined  in  the  Private  Securities
Litigation  Reform Act of 1995).  These  forward-looking  statements may involve
risks and  uncertainties.  Although  management  believes that the  expectations
reflected in such forward-looking statements are reasonable,  actual results may
differ from the results in these forward-looking statements.

Changes in Financial Condition

The Company's  total assets of  $151,591,000 at June 30, 2001, are reflective of
an increase of  $1,679,000  or 1.1%,  as compared to  $149,912,000  at March 31,
2001.  The  increase in total  assets was due to  increases  in  mortgage-backed
securities,  interest-bearing  deposits with other financial  institutions,  and
prepaid expenses and other assets, offset by decreases in investment securities,
cash, loans receivable, premises and equipment and accrued interest.

The  increase  in the  Company's  liabilities  was due to  increases  in savings
deposits,  advances from borrowers for taxes and insurance, and accrued expenses
and other  liabilities.  Changes in the  components of assets,  liabilities  and
equity are discussed herein.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing   deposits,  totaled  $9,601,000,  an
increase of $389,000 or 4.2% from the prior quarter. This increase was primarily
due to increased  interest-bearing  deposits maintained at the Federal Home Loan
Bank ("FHLB").

Investment  Securities.  Investment  securities totaled  $25,102,000 at June 30,
2001, a decrease of $982,000 or 3.8%,  as compared to  $26,084,000  at March 31,
2001. The decrease was primarily due to proceeds received from maturities, calls
and  payments  totaling  $1.1  million,  offset by purchases of $131,000 of U.S.
Agency securities.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $58,539,000 at
June 30, 2001, an increase of $2,632,000 or 4.7%, as compared to  $55,907,000 at
March 31, 2001.  The increase  was due to purchases of $7.6  million,  partially
offset by principal repayments and maturities totaling $5.0 million.

Loans   Receivable,   net.  Net  loans  receivable  at  June  30,  2001  totaled
$49,517,000, a decrease of $281,000 or 0.6%, as compared to $49,798,000 at March
31, 2001. The decrease was primarily due to principal  repayments  totaling $3.8
million,  partially  offset by the origination of $61,000 in one- to four-family
mortgage  loans and $134,000 in consumer  loans,  and  purchases of $2.1 million
conventional  one- to  four-family  mortgage  loans,  $187,000  insured  Federal
Housing  Administration  ("FHA")  and  Veterans  Administration  ("VA")  one- to
four-family  mortgage loans,  $238,000 Government National Mortgage  Association
("GNMA")  insured  multi-family  project  loans,  and  $781,000  Small  Business
Administration (SBA) loans.

Deposits.  Total deposits,  after interest credited,  increased by $1,666,000 or
2.3% to  $75,065,000  at June 30, 2001, as compared to  $73,399,000 at March 31,
2001.  The increase was due to increases in passbook and Money Market  accounts,
and certificates of deposit, offset by a decrease in NOW accounts.

FHLB Advances. FHLB advances totaled $48,000,000 at both June 30, 2001 and March
31, 2001. The Company uses FHLB advances as a supplement to deposits to fund its
purchase of loans and investments.

Stockholders' Equity. Stockholders' equity totaled $24,920,000 at June 30, 2001,
as compared to  $25,102,000  at March 31, 2001. The decrease of $182,000 or 0.7%
was  primarily  due to the  purchase  of 5,430  shares of  treasury  stock at an
average cost of $7.38 per share,  and the payment of a $0.12  regular  quarterly
cash dividend and a $0.20 special cash  dividend,  partially  offset by earnings
for the three months ended June 30, 2001.

                                        7
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the Three Months Ended June 30, 2001 and 2000

Net Income.  The Company  recorded  net income of $138,000  for the three months
ended June 30, 2001,  as compared to net income of $283,000 for the three months
ended June 30, 2000.  The $145,000 or 51.2% decrease in net income for the three
months  ended  June 30,  2001 was  primarily  the  result of a  decrease  in net
interest  income  and an  increase  in other  expenses,  partially  offset  by a
reduction in the provision for income taxes. Changes in the components of income
and expense are discussed herein.

Net Interest  Income.  Net interest income  decreased  $160,000 or 14.9% for the
three months  ended June 30,  2001,  as compared to the three month period ended
June 30, 2000. The average balance of interest-earning assets decreased $799,000
or 0.6%,  and the average yield earned  thereon  decreased 34 basis points.  The
average balance of interest-bearing  liabilities  decreased by $884,000 or 0.7%,
however, the average rate paid thereon increased 11 basis points.

The interest rate spread,  which is the difference  between the yield on average
interest-earning  assets and the cost of average  interest-bearing  liabilities,
decreased to 1.76% for the three month period ended June 30, 2001 from 2.21% for
the three month period ended June 30,  2000.  The decrease in the interest  rate
spread was primarily the result of decreased  yields on the average  balances of
interest  earning  assets and  increased  rates paid on the average  balances of
savings deposits and FHLB advances.

Interest Income.  Interest income  decreased  $136,000 or 5.3% to $2,425,000 for
the three month period ended June 30, 2001,  as compared to  $2,561,000  for the
three month period ended June 30, 2000.

Interest on loans  receivable  decreased  $126,000 or 12.3% for the three months
ended June 30, 2001,  as compared to the three month period ended June 30, 2000.
This decrease was primarily the result of a $6.0 million decrease in the average
balance of loans  receivable  and a 13 basis point decrease in the average yield
earned thereon.

Interest income on mortgage-backed  securities decreased $42,000 or 4.2% for the
three months ended June 30, 2001, as compared to the three months ended June 30,
2000.  This  decrease  was  primarily  the result of a $786,000  decrease in the
average balance of  mortgage-backed  securities and a 19 basis point decrease in
the average yield earned thereon.

Interest  income on investment  securities  decreased by $40,000 or 8.6% for the
three months ended June 30, 2001, as compared to the three months ended June 30,
2000. The decrease in interest income on investment securities was primarily due
to a decrease of $1.2 million in the average balance of such securities and a 31
basis point decrease in the average yield earned thereon.

Interest income on other interest-earning  assets increased by $72,000 or 109.1%
for the three months ended June 30, 2001,  as compared to the three months ended
June 30, 2000.  The increase was  primarily  due a $7.2 million  increase in the
average balance of other  interest-earning  assets,  offset by a 171 basis point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 6.74%
and  7.08%  for  the  three  month   periods  ended  June  30,  2001  and  2000,
respectively.

Interest Expense. Interest expense totaled $1,511,000 for the three months ended
June 30,  2001,  as compared to  $1,487,000  for the three months ended June 30,
2000.  The  $24,000 or 1.6%  increase  was  primarily  due to an 11 basis  point
increase  in the  average  rate  paid  on  the  total  average  interest-bearing
liabilities,  partially offset by decreased average balances in savings deposits
and FHLB advances.

Interest expense on deposits  (including escrows) totaled $848,000 for the three
months ended June 30,  2001,  as compared to $815,000 for the three months ended
June 30, 2000.  The $33,000 or 4.0%  increase was  primarily  due to an 18 basis
point  increase in the  average  rate paid on deposits  and  escrows,  partially
offset by a $51,000 decrease in the average balance of deposits.

Interest on FHLB  advances  decreased  $9,000 or 1.3% for the three months ended
June 30, 2001, as compared to the three months ended June 30, 2000. The decrease
was primarily due to a decrease of $833,000 in the average  balance of advances,
partially  offset by a 3 basis  point  increase  in the rate paid  thereon.  The
Company  uses  FHLB  advances  as a  funding  source  and has in the  past  used
borrowings to supplement  deposits,  which are the Company's  primary  source of
funds.
                                        8
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Allowance for Loan Losses. Based upon management's  evaluation of the underlying
credit risk of the loan  portfolio  and the level of allowance  for loan losses,
the Company  established  no  provisions  for loan losses during the three month
periods ending June 30, 2001 and 2000.

At both June 30, 2001 and March 31, 2001,  the allowance for loan losses totaled
$425,000 or .85% and  1,416.7% of total  loans and total  non-performing  loans,
respectively. The Company's non-performing loans (non-accrual loans and accruing
loans 90 days or more overdue)  totaled  $30,000 at both June 30, 2001 and March
31, 2001,  which  represented  0.06% of the Company's total loans. The Company's
ratio of  non-performing  loans to total assets were 0.02% at both June 30, 2001
and March 31, 2001.

Other  Income.  During  the three  months  ended  June 30,  2001,  other  income
increased $16,000 or 61.5%, as compared to the three months ended June 30, 2000.

Other Expenses.  Total other expenses  increased by $128,000 or 21.2% during the
three months ended June 30, 2001, as compared to the three months ended June 30,
2000.  The increase  was  primarily  attributable  to an increase of $136,000 in
compensation and employee  benefits  expense,  offset by a decrease of $5,000 in
premises  and  occupancy   costs  and  $3,000  in  other   operating   expenses.
Compensation and employee benefits expense increased due to increases of $74,000
in the Company's defined benefit plan and Supplemental  Employee Retirement Plan
(SERP) costs, $45,000 in compensation and other employee benefits expense due to
increased salaries and bonuses, and $21,000 in ESOP expense,  offset by a $4,000
decrease in RSP  expense.  The increase in SERP costs was due to an amendment to
the SERP in December  2000,  resulting in an increase in the  Projected  Benefit
Obligation ("PBO") and the expense to the plan. The increase in ESOP expense was
due to an increase in the market price of the stock and the Company's commitment
to release an additional  4,492 shares of stock in  anticipation of repaying the
ESOP loan in its entirety by December 2001.

Income Tax Expense.  The provision for income tax totaled  $85,000 for the three
months ended June 30,  2001,  as compared to $212,000 for the three months ended
June 30, 2000. The $127,000 or 60.0% decrease was due to decreased income.

Regulatory Capital Requirements

The Bank is subject to federal  regulations  that impose certain minimum capital
requirements. Quantitative measures, established by regulation to ensure capital
adequacy,  require the Bank to maintain  amounts and ratios of tangible and core
capital  to  adjusted  total  assets  and  of  total   risk-basked   capital  to
risk-weighted  assets.  On June 30, 2001,  the Bank was in  compliance  with its
three regulatory capital requirements as follows:


                                                    Amount          Percent
                                                    ------          -------
                                                     (Dollars in thousands)

      Tangible capital............................  $23,988           15.84%
      Tangible capital requirement................    2,271            1.50
                                                    -------          ------
      Excess over requirement.....................  $21,717           14.34%
                                                    =======          ======

      Core capital................................  $23,988           15.84%
      Core capital requirement....................    4,542            3.00
                                                    -------          ------
      Excess over requirement.....................  $19,446           12.84%
                                                    =======          ======

      Risk based capital..........................  $24,413           55.82%
      Risk based capital requirement..............    3,499            8.00
                                                    -------          ------
      Excess over requirement.....................  $20,914           47.82%
                                                    =======          ======


Management  believes that under current  regulations,  the Bank will continue to
meet its minimum capital  requirements in the foreseeable future.  Events beyond
the control of the Bank,  such as increased  interest rates or a downturn in the
economy  in areas in which  the Bank  operates  could  adversely  affect  future
earnings  and as a result,  the  ability of the Bank to meet its future  minimum
capital requirements.

                                        9
<PAGE>

                           PART II - OTHER INFORMATION




Item 1.        Legal Proceedings.
               -----------------

               The company's subsidiary First Carnegie Deposit and  other  third
               parties were informed of an impending legal  action  regarding  a
               previously completed sale of  foreclosed  real  estate.  Although
               First Carnegie Deposit has not been served as a defendant in  any
               lawsuit, the Company has notified its insurance carrier  of  this
               potential action. At this time management believes  this  action,
               if commenced, will not result in significant loss to the Company.

               The Company and its counsel are not in a position at this time to
               express an opinion as to the outcome of this action.

Item 2.        Changes in Securities.
               ---------------------

               Not applicable.


Item 3.        Defaults Upon Senior Securities.
               -------------------------------

               Not applicable.


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

               Not applicable.


Item 5.        Other Information.
               -----------------

               Not applicable.


Item 6.        Exhibits and Reports on Form 8-K.
               --------------------------------

               a) Not applicable

               b) Not applicable


                                       10

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.





                                         SKIBO FINANCIAL CORP.


Date: July 31, 2001
                                     By: /s/ Walter G. Kelly
                                         ---------------------------------------


                                         Walter G. Kelly
                                          President and Chief Executive Officer
                                          (Duly Authorized Representative)


         Pursuant to the  requirement  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                                     <C>
/s/ Walter G. Kelly                       /s/ Carol A. Gilbert
-------------------------------------     ---------------------------------------------------
Walter G. Kelly                           Carol A. Gilbert
President and Chief Executive Officer     Chief Financial and Operating Officer and Treasurer
(Principal Executive Officer)             (Principal Financial and Accounting Officer)

Date: July 31, 2001                       Date: July 31, 2001

</TABLE>