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, 1999
                               -------------

|_|  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 August 11, 1999


$0.10 Par Value Common Stock                                  3,449,974 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, 1999 (unaudited) and March 31, 1999)..............................1

  Consolidated Statements of Income (For the three
  months ended June 30, 1999 and 1998 (unaudited))...........................2

  Consolidated Statement of Stockholders' Equity (For the
  three months ended June 30, 1999 (unaudited)...............................3

  Consolidated Statements of Cash Flows (For the three
  months ended June 30, 1999 and 1998 (unaudited))...........................4

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


Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations..............................8



PART 11.  OTHER INFORMATION
--------  -----------------


Item 1.     Legal Proceedings...............................................13
Item 2.     Changes in Securities...........................................13
Item 3.     Defaults Upon Senior Securities.................................13
Item 4.     Submission of Matters to a Vote of Security-Holders.............13
Item 5.     Other Information...............................................13
Item 6.     Exhibits and Reports on Form 8-K................................13


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,
                                                                           1999                1999
                                                                           ----                ----

                    ASSETS                                             (Unaudited)
                    ------
<S>                                                                   <C>                <C>
Cash and amounts due from depository institutions                        $     514         $    1,288
Interest-bearing deposits with other institutions                            8,343              1,211
Investment securities:
     Held-to-maturity (market value $23,315 and $24,703)                    24,296             25,087
Mortgage-backed securities:
     Held-to-maturity (market value $52,698 and $54,605)                    53,244             54,365
Loans receivable, net                                                       60,877             65,309
Accrued interest receivable:
     Investment securities                                                     313                400
     Mortgage-backed securities                                                363                382
     Loans receivable                                                          580                726
Federal Home Loan Bank stock, at cost                                        2,465              2,465
Premises and equipment, net                                                    680                695
Prepaid expenses and other assets                                            3,159              3,128
                                                                          --------           --------

        Total Assets                                                     $ 154,834          $ 155,056
                                                                           =======            =======

               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------
Liabilities:
     Savings deposits                                                    $  76,516         $   76,917
     Federal Home Loan Bank advances                                        49,300             49,300
     Bonds payable                                                           1,299              1,299
     Advances from borrowers for taxes and insurance                           198                143
     Accrued expenses and other liabilities                                  2,187              2,267
                                                                          --------          ---------

        Total Liabilities                                                  129,500            129,926


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                                              9,753              9,755
     Treasury stock, at cost (7,863 shares at June 30, 1999
         and 5,228 shares at March 31, 1999)(1)                                (82)               (65)
     Unearned employee stock ownership plan (ESOP) shares                     (404)              (458)
     Unearned restricted stock plan (RSP) shares                              (343)              (392)
     Retained earnings, substantially restricted                            16,065             15,945
                                                                           -------            -------

        Total Stockholders' Equity                                          25,334             25,130
                                                                           -------            -------

        Total Liabilities and Stockholders' Equity                       $ 154,834          $ 155,056
                                                                           =======            =======

</TABLE>


(1)  For  reporting  purposes,  shares  held by the Bank for the  Bank's RSP are
     reported as treasury stock.

     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, 1999 and 1998

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                   June 30,           June 30,
                                                                    1999               1998
                                                                    ----               ----
                                                                       (Unaudited)
<S>                                                              <C>               <C>
Interest income:
     Loans receivable                                               $   1,149         $  1,237
     Mortgage-backed securities                                           835              891
     Investment securities                                                404              262
     Other                                                                 98               87
                                                                        -----            -----
            Total interest income                                       2,486            2,477

Interest expense:
     Savings deposits                                                     816              879
     Federal Home Loan Bank advances                                      626              576
     Bonds payable                                                         31               39
     Other borrowings                                                      --               14
                                                                        -----            -----
           Total interest expense                                       1,473            1,508
                                                                        -----            -----

           Net interest income                                          1,013              969

Provision for loan losses                                                   1                3
                                                                        -----            -----
           Net interest income after provision for loan losses          1,012              966
Other income:
     Fees and service charges                                              19               13
     Other                                                                  9                8
                                                                         ----            -----
           Total other income                                              28               21

Other expenses:
     Compensation and employee benefits                                   490              656
     Premises and occupancy costs                                          54               56
     Federal insurance premiums                                            11               12
     Other operating expenses                                              84              107
                                                                          ---              ---
           Total other expenses                                           639              831
                                                                        -----              ---

      Income before income taxes                                          401              156

Provision for income taxes                                                174               60
                                                                          ---               --
           Net income                                                  $  227            $  96
                                                                          ===               ==



Basic earnings per share                                               $  .07           $  .03
Diluted earnings per share                                             $  .07           $  .03

Weighted average shares outstanding - basic                         3,348,686        3,357,244
Weighted average shares outstanding - diluted                       3,348,686        3,357,244

</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, 1999 (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, 1999             $345          $9,755        $ (65)        $ (458)      $  (392)         $15,945      $25,130

Cash dividends declared net
  ($.075 per share)                     --              --           --             --            --             (107)        (107)

Excess of fair value above cost of
 ESOP shares released or
 committed to be released               --              (2)          --             --            --               --           (2)

Amortization of ESOP liability          --              --           --             54            --               --           54

Amortization of RSP liability           --              --           --             --            49               --           49

Treasury stock purchased,
 at cost (2,635 shares)                 --              --          (17)            --            --               --          (17)

Net income                              --              --           --             --            --              227          227
                                  ------------------------------------------------------------------------------------------------


Balance at June 30, 1999              $345          $9,753        $ (82)        $ (404)      $  (343)         $16,065      $25,334
                                  ================================================================================================
</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, 1999 and 1998

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                   1999        1998
                                                                                                 --------    --------
                                                                                                     (Unaudited)


<S>                                                                                           <C>         <C>
Operating activities:
     Net income                                                                                  $    227    $     96
     Adjustments  to  reconcile  net  income to net cash
     (used in)  provided  by operating activities:
           Provision for loan losses                                                                    1           3
           Depreciation                                                                                20          22
           Compensation expense-ESOP and RSP                                                          101         295
           Net amortization of premiums and discounts                                                  71          63
           Decrease (increase) in accrued interest receivable                                         252         (12)
           Increase in prepaid expenses                                                               (31)        (51)
           Increase in accrued interest payable                                                       175         339
           Decrease in accrued income taxes                                                          (110)       (185)
           Other, net                                                                                (155)        (31)
                                                                                                 --------    --------
             Net cash provided by operating activities                                                551         539
                                                                                                 --------    --------

Investing activities:
     Purchases of premises and equipment                                                               (5)        (20)
     Purchases of investment securities held-to maturity                                             (720)     (1,152)
     Purchases of mortgage-backed securities held-to-maturity                                      (4,117)     (1,385)
     Proceeds from maturities/calls and principal repayments of:
       Investment securities held-to-maturity                                                       1,503       1,895
       Mortgage-backed securities held-to-maturity                                                  5,201       4,305
     Loans purchased                                                                                 (547)     (6,046)
     Net principal repayments on loans                                                              4,962       5,401
                                                                                                             --------
       Net cash provided by investing activities                                                 $  6,277    $  2,998
                                                                                                 --------    --------


Financing activities:
     Net decrease in savings deposits                                                                (401)       (604)
     Proceeds from Federal Home Loan Bank advances                                                   --         8,000
     Repayment of Federal Home Loan Bank advances                                                    --       (10,500)
     Net increase in mortgage escrow                                                                   55          84
     Treasury stock purchased                                                                         (17)       --
     Cash dividends paid                                                                             (107)        (71)
                                                                                                 --------    --------
      Net cash used in financing activities                                                          (470)     (3,091)
                                                                                                 --------    --------

Net increase in cash and cash equivalents                                                           6,358         446
Cash and cash equivalents, beginning of period                                                      2,499       3,271
                                                                                                 --------    --------
Cash and cash equivalents, end of period                                                         $  8,857    $  3,717
                                                                                                 ========    ========
Supplemental  disclosures of cash flow information:
      Cash paid during the period for:
        Interest                                                                                  $  1,298    $  1,170
                                                                                                 ========    ========

       Income taxes                                                                              $    330    $    245
                                                                                                 ========    ========

</TABLE>



               See accompanying notes to consolidated financial statements.


                                        4

<PAGE>




NOTE 1 -  Corporate Reorganization
          ------------------------

On October 29, 1998, First Carnegie Deposit  reorganized into a two-tier holding
company  structure.  First  Carnegie  Deposit  formed a new mid-tier,  federally
chartered,  stock holding company, Skibo Financial Corp. (the "Company"),  which
is 55% owned by Skibo  Bancshares,  M.H.C.  As a result of this  reorganization,
Skibo  Financial Corp.  became the parent company of First Carnegie  Deposit and
owns 100% of First  Carnegie  Deposit's  common stock.  Upon  surrender of First
Carnegie  Deposit  common  stock,  shareholders  of record on October  29,  1998
received,  on a three-for-two  basis,  shares of the new publicly traded entity,
Skibo Financial Corp.

The  reorganization  was  accounted  for in a manner  similar  to a  pooling  of
interests.  Accordingly,  the prior years' consolidated  financial statements of
the  Company  are  identical  to  the  prior  periods'  consolidated   financial
statements of First Carnegie Deposit.

NOTE 2 -  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 subsidiaries, Fedcar, Inc. and
Carnegie  Federal  Funding  Corporation  ("CFFC").  Fedcar,  Inc.  is a  service
corporation  that is currently  inactive.  CFFC is a special purpose  subsidiary
that was formed for the issuance of collateralized mortgage obligations.

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,  1999 are not
necessarily  indicative  of the results to be expected for the year ending March
31, 2000 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, 1999.

NOTE 3 -  Reclassification of Prior Period's Statements
          ---------------------------------------------

Certain amounts reported in the prior period's consolidated financial statements
have been  reclassified to conform with the current period's  reporting  format.
The number of shares  and  related  earnings  per share  have been  restated  to
reflect the Company's reorganized structure and three-for-two  exchange of stock
in fiscal year 1999.

NOTE 4 -  Dividends on Common Stock
          -------------------------

On June 10, 1999,  the Board of  Directors of the Company  declared a $0.075 per
share cash dividend on the Company's outstanding shares of common stock, payable
to stockholders of record as of June 30, 1999.  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 remaining  outstanding shares were paid on July 15, 1999. There
can be no assurance  that the Office of Thrift  Supervision  ("OTS") will permit
future dividend waivers, or of the terms of such permitted waivers. Furthermore,
any waiver of dividends by the M.H.C.  may result in 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 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".



                                        5

<PAGE>


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

NOTE 5 - 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.

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


                                                        Three Months Ended
                                                    -------------------------

                                                     June 30,       June 30,
                                                      1999           1998
                                                      ----           ----


Basic EPS computation:
 Numerator-Net Income                            $    227,000   $     96,000
 Denominator-Wt Avg common shares outstanding       3,348,686      3,357,244
Basic EPS                                        $        .07   $        .03
                                                  ===========      =========

Diluted EPS computation:
 Numerator-Net Income                            $    227,000   $     96,000
                                                    =========      =========
 Denominator-Wt Avg common shares outstanding       3,348,686      3,357,244
 Dilutive Stock Options                                    --             --
 Dilutive Unvested RSP                                     --             --
                                                  -----------    -----------
 Weighted avg common shares and common stock
   equivalents                                      3,348,686      3,357,244
Diluted EPS                                      $        .07   $        .03
                                                  ===========    ===========



For the quarter ended June 30, 1999, 30,946 RSP shares and 155,246 Option shares
were  excluded  from the  diluted  EPS  computation  due to their  anti-dilutive
effect.  Shares outstanding for the three months ended June 30, 1999 and 1998 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 60,585 and 90,675 at June 30, 1999
and 1998, respectively.

NOTE 6 -  Comprehensive Income
          --------------------

For the  three  months  ended  June  30,  1999 and  1998,  the  Company's  total
comprehensive income was $227,000 and $96,000, 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 7 -  Recent Accounting, Regulatory and Other Matters
          -----------------------------------------------

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and  Hedging   Activities".   This  statement   requires  that  all
derivatives  be recognized as either assets or  liabilities in the balance sheet
and that those instruments be measured at fair value. The accounting for changes
in the fair value of a  derivative  (that is,  gains and losses)  depends on the
intended use of the  derivative  and  resulting  designation.  SFAS No. 133 also
permits certain  reclassification of securities among the available for sale and
held to maturity  classifications.  This statement was originally intended to be
effective for fiscal years beginning after June 15, 1999, with earlier  adoption
permitted.  However,  in June,  1999,  FASB issued SFAS No. 137 which delays the
effective  date of SFAS No. 133 for one year,  to fiscal years  beginning  after
June 15, 2000. The Company  anticipates,  based on current activities,  that the
adoption  of SFAS No. 133 will not have an effect on its  financial  position or
results of operations.



                                        6

<PAGE>


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

In October 1998, the FASB issued SFAS No. 134  "Accounting  for  Mortgage-Backed
Securities  Retained After the Securitization of Mortgage Loans Held for Sale by
a  Mortgage-Banking  Enterprise,"  which  amends  SFAS No. 65,  "Accounting  for
Certain Mortgage  Banking  Activities."  This statement  conforms the subsequent
accounting for securities retained after the securitization of mortgage loans by
a mortgage  banking  enterprise  with the  accounting  for such  securities by a
nonmortgage  banking  enterprise.  This  statement  was  effective for the first
quarter beginning January 1, 1999, and has no impact on the Company's  financial
position or results of operations  as the Company does not currently  securitize
mortgage loans.

NOTE 8 -  Income Taxes
          ------------

Income tax expense is recognized after giving effect to special rules applicable
to thrift  institutions.  The Company  joins with its wholly  owned  subsidiary,
First Carnegie Deposit, in filing a consolidated federal income tax return.

The Company 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 or settled.



                                        7

<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 $154,834,000 at June 30, 1999, are reflective of a
decrease of $222,000 or 0.1% as compared to  $155,056,000 at March 31, 1999. The
decrease in total assets was primarily due to decreases in cash,  investment and
mortgage-backed securities, loans receivable, premises and equipment and accrued
interest,  partially offset by increases in interest-bearing deposits with other
institutions and prepaid expenses.

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

Loans  Receivable,   net.  Net  loans  receivable  at  June  30,  1999  totalled
$60,877,000,  a decrease of $4,432,000 or 6.8%,  as compared to  $65,309,000  at
March 31, 1999. The decrease was primarily due to principal repayments totalling
$5.0 million, partially offset by the origination of $24,000 one- to four-family
and $58,000  consumer  loans,  and  purchases  of $247,000  farm  mortgages  and
$301,000 Small Business  Administration  (SBA) loans.  The Company  continued to
experience  refinancings  in its mortgage  portfolio  due to low market rates of
interest and continued competition.

Mortgage-backed Securities.  Mortgage-backed securities were $53,244,000 at June
30, 1999, a decrease of $1,121,000 or 2.1%, as compared to  $54,365,000 at March
31, 1999. The decrease was due to principal  repayments and maturities totalling
$5.2 million, partially offset by purchases of $4.1 million.

Investment  Securities.  Investment  securities totalled $24,296,000 at June 30,
1999, a decrease of $791,000 or 3.2%,  as compared to  $25,087,000  at March 31,
1999. The decrease was primarily due to proceeds received from maturities, calls
and payments  totalling  $1.5  million,  offset by purchases of $720,000 of U.S.
Agency securities.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing  deposits,  totalled  $8,857,000,  an
increase of  $6,358,000  or 254.4% from the prior  quarter.  This  increase  was
primarily due to increased  interest-bearing  deposits maintained at the Federal
Home Loan Bank ("FHLB") in  anticipation  of utilizing these funds for repayment
of FHLB advances and purchases of loans and investments in the event of a higher
interest rate environment.

Deposits. Total deposits, after interest credited, decreased by $401,000 or 0.5%
to  $76,516,000  at June 30, 1999, as compared to $76,917,000 at March 31, 1999.
The decrease was primarily due to decreases in certificates of deposit and Money
Market accounts, partially offset by an increase in passbook and NOW accounts.

FHLB Advances. FHLB advances totalled $49,300,000 at both June 30, and March 31,
1999.  The Company uses FHLB  advances as a  supplement  to deposits to fund its
purchase of loans and investments.

Stockholders'  Equity.  Stockholders'  equity  totalled  $25,334,000 at June 30,
1999, as compared to  $25,130,000 at March 31, 1999. The increase of $204,000 or
0.8% was primarily due to earnings for the three months ended June 30, 1999.


                                        8

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

Results of Operations for the Three Months Ended June 30, 1999 and 1998

Net Income.  The Company  recorded  net income of $227,000  for the three months
ended June 30,  1999,  as compared to net income of $96,000 for the three months
ended June 30, 1998. The $131,000 or 136.5% increase in net income for the three
months ended June 30, 1999 was  primarily  the result of a reduction in employee
benefits expense.  Changes in the components of income and expense are discussed
herein.

Net Interest Income. Net interest income increased $44,000 or 4.5% for the three
months ended June 30, 1999, as compared to the three month period ended June 30,
1998.  Although the average balance of  interest-earning  assets  increased $5.9
million or 4.1%, the average yield earned thereon decreased 24 basis points. The
average  balance of  interest-bearing  liabilities  increased by $6.3 million or
5.2%,  offset  somewhat  by a 35 basis point  decrease in the average  rate paid
thereon.

The interest rate spread,  which is the difference  between the yield on average
interest-earning  assets and the cost of average  interest-bearing  liabilities,
increased to 2.00% for the three month period ended June 30, 1999 from 1.89% for
the three month period ended June 30,  1998.  The increase in the interest  rate
spread was  primarily  the result of FHLB advances at lower rates and a decrease
in the rates paid on  certificates  of  deposit,  due to the  maturity of higher
yielding long term certificates of deposit.

Interest Income.  Interest income increased $9,000 or 0.4% to $2,486,000 for the
three month period ended June 30, 1999, as compared to $2,477,000  for the three
month period ended June 30, 1998.

Interest  on loans  receivable  decreased  $88,000 or 7.1% for the three  months
ended June 30, 1999,  as compared to the three month period ended June 30, 1998.
This decrease was primarily the result of a $6.9 million decrease in the average
balance of loans receivable,  offset by a 23 basis point increase in the average
yield earned thereon.

Interest income on mortgage-backed  securities decreased $56,000 or 6.3% for the
three months ended June 30, 1999, as compared to the three months ended June 30,
1998. This decrease was primarily the result of a 55 basis point decrease in the
average yield earned thereon,  offset by a $1.1 million  increase in the average
balance of such securities.

Interest income on investment  securities increased by $142,000 or 54.2% for the
three months ended June 30, 1999, as compared to the three months ended June 30,
1998. The increase in interest income on investment securities was primarily due
to an increase of $9.5 million in the average balance of such securities, offset
by a decrease in the average yield of 37 basis points.

Interest income on other  interest-earning  assets increased by $11,000 or 12.6%
for the three months ended June 30, 1999,  as compared to the three months ended
June 30, 1998.  The increase was  primarily  due a $2.3 million  increase in the
average interest-earning assets at the FHLB, offset by a 95 basis point decrease
in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 6.66%
and  6.90%  for  the  three  month   periods  ended  June  30,  1999  and  1998,
respectively.

Interest  Expense.  Interest  expense  totalled  $1,473,000 for the three months
ended June 30, 1999, as compared to  $1,508,000  for the three months ended June
30, 1998.  The $35,000 or 2.3% decrease was  primarily due to decreased  average
balances in certificates of deposit,  passbook savings, money market, and escrow
accounts  and bonds  payable and other  borrowings,  offset by increases in FHLB
advances and NOW accounts.  The 35 basis point decrease in the average rate paid
on the  total  average  interest-bearing  liabilities  also  contributed  to the
decrease.

Interest expense on deposits  (including  escrows) decreased $63,000 or 7.2% for
the three months ended June 30, 1999, as compared to the three months ended June
30, 1998.  The decrease was  primarily  due to a 34 basis point  decrease in the
average rate paid on deposits and escrows,  offset by an increase of $125,000 in
the average balance of such deposits.

Interest on FHLB advances  increased  $50,000 or 8.7% for the three months ended
June 30, 1999, as compared to the three months ended June 30, 1998. The increase
was  primarily  due to an  increase of $7.2  million in the  average  balance of
advances,  offset by a 39 basis  point  decrease 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.


                                        9

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

Interest on bonds payable and other  borrowings,  a less significant  portion of
interest expense, decreased by $22,000 or 41.5%, as the average principal amount
of other  borrowings  decreased  by  $985,000.  The  average  rate paid on bonds
payable and other borrowings increased 27 basis points.

Provision  for Loan Losses.  During the three month  periods ended June 30, 1999
and 1998,  the  Company  established  provisions  for loan  losses of $1,000 and
$3,000,  respectively.  This reflected management's evaluation of the underlying
credit risk of the loan portfolio and the level of allowance for loan losses.

At June 30, 1999,  the allowance for loan losses  totalled  $577,000 or .94% and
164.9% of total loans and total non-performing loans, respectively,  as compared
to $575,000 or .88% and 70.3%,  respectively,  at March 31, 1999.  The Company's
non-performing  loans  (non-accrual  loans  and  accruing  loans 90 days or more
overdue)  totalled  $350,000  and  $818,000  at June 30, 1999 and March 31, 1999
respectively,  which  represented  0.6% and 1.3% of the  Company's  total loans,
respectively. The non-performing loans, however, include one Farm Service Agency
(FSA)  guaranteed  loan at June  30,  1999  and two at  March  31,  1999,  which
represent 91.7% and 75.4% of the total non-performing loans at June 30, 1999 and
March 31, 1999,  respectively.  The Company's ratio of  non-performing  loans to
total  assets  was  .23%  and  .53%  at  June  30,  1999  and  March  31,  1999,
respectively.

Other  Income.  During  the three  months  ended  June 30,  1999,  other  income
increased  $7,000 or 33.3%, as compared to the three months ended June 30, 1998,
primarily due to increased loan fees.

Other Expenses.  Total other expenses  decreased by $192,000 or 23.1% during the
three months ended June 30, 1999, as compared to the three months ended June 30,
1998.  The  decrease  was  primarily  attributable  to a decrease of $166,000 in
compensation  and employee  benefits  expense.  The  reduction  in  compensation
expense was due to a $207,000 reduction in RSP expense, as compared to the prior
year's quarter, which reflected the implementation of the restricted stock plan,
including the immediate vesting of a portion of such awards,  offset by a $6,000
increase in compensation and employee  benefits  expense,  a $11,000 increase in
ESOP  expense,  and a $24,000  increase in the Company's  defined  benefit plan,
Supplemental  Employee  Retirement  Plan (SERP) and Director's  Retirement  Plan
(DRP) costs.

Income Tax Expense. The provision for income tax totalled $174,000 for the three
months  ended June 30,  1999,  as compared to $60,000 for the three months ended
June 30, 1998. The $114,000 or 190.0% increase was due to increased income.

Liquidity and Capital Requirements

The Company's  subsidiary  bank, First Carnegie  Deposit,  is subject to various
requirements  administered by the federal banking agencies. The Bank is required
by Section 6 of the Home Owners'  Loan Act ("HOLA") to hold a prescribed  amount
of  statutorily  defined  liquid  assets.  The  Director  of  the  OTS  may,  by
regulation,  vary the  amount  of the  liquidity  requirement,  but only  within
pre-established  statutory  limits.  The  requirement  must be no less than four
percent and no greater than ten percent of the Bank's net withdrawable  accounts
and  borrowings  payable on demand or with  unexpired  maturities of one year or
less.  The  minimum  required  liquidity  is  currently  4%. The Bank's  average
liquidity  ratio was 113.13% and  129.98%,  at June 30, 1999 and March 31, 1999,
respectively.

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, 1999,  the Bank was in  compliance  with its
three regulatory capital requirements as follows:
                                                    Amount           Percent
                                                    ------           -------
                                                    (Dollars in thousands)

Tangible capital..............................      $24,207           15.68%
Tangible capital requirement..................        2,316            1.50%
                                                    -------          ------
Excess over requirement.......................      $21,891           14.18%
                                                     ======           =====

Core capital..................................      $24,207           15.68%
Core capital requirement......................        4,631            3.00%
                                                    -------          ------
Excess over requirement.......................      $19,576           12.68%
                                                     ======           =====

Risk based capital............................      $24,783           52.32%
Risk based capital requirement................        3,789            8.00%
                                                    -------          ------
Excess over requirement.......................      $20,994           44.32%
                                                    ======           =====

                                       10

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

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.

At June  30,  1999,  the most  recent  notification  from the OTS,  the Bank was
categorized  as "well  capitalized"  under the  regulatory  framework for prompt
corrective action. To be categorized as well capitalized, the Bank must maintain
minimum Tier I (leverage),  Tier I  risk-basked,  and total  risk-based  capital
ratios of 5.0%, 6.0%, and 10.0%, respectively. At June 30, 1999, the Bank's Tier
I (leverage),  Tier I risk-based,  and total risk-basked capital ratios amounted
to 15.68%, 51.10%, and 52.32%,  respectively.  There are no conditions or events
since  that  notification  that  management  believes  have  changed  the Bank's
category.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative  and  qualitative  disclosures  about market risk are  presented at
March  31,  1999  in the  Company's  1999  Annual  Report.  See  "Market  Risk &
Asset/Liability  Management".  Management  believes  there have been no material
changes in the Company's market risk since March 31, 1999.

Year 2000 (Y2K) Readiness Disclosure

Rapid and accurate data  processing  is essential to the  Company's  operations.
Many  computer  programs that can only  distinguish  the final two digits of the
year entered (a common programming practice in prior years) are expected to read
entries  for the Y2K as the year  1900 or as zero  and  incorrectly  attempt  to
compute payment, interest, delinquency and other data.

The following  discussion of the implications of the Y2K problem for the Company
contains  numerous  forward  looking  statements  based on inherently  uncertain
information.  The cost of the project is based on  management's  best estimates,
which are derived  utilizing a number of assumptions of future events  including
the  continued  availability  of internal  and external  resources,  third party
modifications and other factors.  However,  there can be no guarantee that these
statements will be achieved and actual results could differ. Moreover,  although
management  believes  it will be able to make  the  necessary  modifications  in
advance,  there can be no guarantee that failure to modify the systems would not
have a material adverse effect on the Company.

The Company utilizes an in-house computer system, with all software applications
being  developed and modified  internally.  The Company first  acknowledged  and
addressed  the  potential  problem  associated  with the Y2K early in 1990.  The
Company  completed  renovation of its in-house data  processing  system prior to
testing in October  1992.  The Company has also  received  vender  certification
confirming  Y2K  compliance  for its hardware  and  operating  system.  With the
exception of on-going testing and additional  contingency  planning,  management
believes nothing more is required with regard to its in-house system. Management
believes that  remaining  efforts  towards Y2K compliance  will require  minimal
expense  and,  therefore,  will  not have a  material  impact  on the  Company's
financial condition or results of operations.

The Company  formed a committee to  implement an action plan  designed to ensure
that the  Company's  computer  systems,  software  applications  and other  date
reliant  equipment would function properly after December 31, 1999. This process
involved  identifying all equipment,  software and third party providers  deemed
critical to the Company's daily operations,  and ascertained that these products
and product  providers are Y2K  compliant.  The Company  places a high degree of
reliance on computer systems of third parties, such as customers, suppliers, and
other  financial and  governmental  institutions.  Although the Company has been
assessing the readiness of these third parties and preparing  contingency plans,
there can be no  guarantee  that the  failure of these  third  parties to modify
their systems in advance of December 31, 1999 would not have a material  adverse
affect on the  Company.  The  Company  has  completed  testing  with the Federal
Reserve Bank of Cleveland. The Federal Reserve Bank of Cleveland has been deemed
critical by the Company in its daily operations.

The Company has contacted all material vendors and suppliers regarding their Y2K
readiness.  Each of these third parties has delivered  written  assurance to the
Company  that Y2K will not be an issue or that the issue will be  satisfactorily
resolved prior to the end of 1999.  Appropriate  testing,  if possible,  and any
related  contingency  plans were  performed  in the second  quarter  and will be
performed in the third  quarter of fiscal 1999.  The Company has  contacted  all
significant  customers and  non-information  technology  suppliers (i.e. utility
systems,  telephone systems, etc.) regarding their Y2K state of readiness.  Such
parties have indicated that they have  established  Y2K plans and are in various
stages of  remediation  and testing.  We are unable to test the Y2K readiness of
our significant suppliers of utilities. We are relying on the utility companies'
internal testing and representations to provide the required services that drive
our data systems.  The Company is  determining  what recourse it would have from
such parties if they do not resolve the Y2K issues. Furthermore,  the Company is
reviewing alternative  procedures and contingency plans for all mission critical
systems in the unlikely event of their failure at the turn of the century.

                                       11
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Approximately  82.4% of the  Company's  loans  are  serviced  by banks  and bank
subsidiaries,  mortgage corporations and loan servicing companies.  The majority
of the loan servicing is provided by five major servicing companies. The Company
cannot contact these customers directly;  however, it has contacted the agencies
servicing  these loans.  Approximately  68.7% of loans the Company  services are
residential mortgage loans and consumer loans. The Company did not contact these
customers because it was deemed to be beyond the scope of the testing parameters
in that the  collateral  for these loans would not be affected.  The Company has
contacted  by phone  its  material  commercial  mortgage  customers.  Commercial
mortgage and non-mortgage  customers represent  approximately 31.3% of the loans
serviced by the Company. The Company reviewed with its customers questions based
on Appendix A of Guidance Concerning the Year 2000 Impact on Customers,  Federal
Financial Institutions Examination Council (FFIEC) Interagency Statement,  March
17, 1998. The Company's Y2K Committee members reviewed the responses to rate the
customers'  risk levels  based on the type of business  and the type of loan and
collateral.  The Company has received  favorable  responses  from its borrowers.
Borrowers  have  established  Y2K plans and are testing  software and contacting
vendors and suppliers  and plan to be ready for Y2K. Any customers  with greater
than low risk level will  receive  follow-up  attention.  The  Company  has made
savings  customers  aware of Y2K issues  through  the use of  account  statement
inserts in October 1998 and May 1999.

Successful  and timely  completion  of the Y2K project is based on  management's
best estimates  derived from various  assumptions  of future  events,  which are
inherently  uncertain,  including the progress and results of the testing plans,
and all vendors,  suppliers and customer  readiness.  The most likely worst case
scenario is that some areas where the Company has branch  offices  located  will
experience  blackouts  if  utility  service  companies  are  unable  to  provide
necessary  service  to drive our data  systems or  provide  sufficient  sanitary
conditions  to our  offices.  In the event that this would  happen,  the Company
would be unable to open the affected  branches,  and customers would be directed
to other branch locations and business would be transacted manually.

The Company concluded that despite the best efforts of management to address its
financial exposure to Y2K issues, the vast number of external entities that have
direct and indirect business  relationships  with the Company make it impossible
to assure that a failure to achieve  compliance by one or more of these entities
would not have a material adverse impact on the operations of the Company.




                                       12

<PAGE>




                           PART II - OTHER INFORMATION




Item 1.   Legal Proceedings.
          ------------------
          The  Company  was not  engaged in any legal  proceeding  of a material
          nature at June 30, 1999.  From time to time, the Company is a party to
          routine legal proceedings in the ordinary course of business,  such as
          claims to enforce  liens,  condemnation  proceedings  on properties in
          which the Company holds security interest, claims involving the making
          and servicing of real property loans, and other issues incident to the
          business of the Company. There were no lawsuits pending or known to be
          contemplated  against  the  Company at June 30, 1999 that would have a
          material effect on the operations or income of the Company.


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)        Exhibits

                    2.0  Agreement and Plan of Reorganization *

                    3.1  Charter of Skibo Financial Corp. *

                    3.2  Bylaws of Skibo Financial Corp. *

                    4.0  Form of Stock Certificate of Skibo Financial Corp. *

                    10.1 Supplemental Executive Retirement Plan **

                    10.2 Directors' Retirement Plan **

                    10.3 Form of Employment Agreement **

                    10.4 1998 Stock Option Plan *



                                       13

<PAGE>






                    10.5 1998 Restricted Stock Plan *

                    11.0 Earnings Per Share Calculation (see note 5 to the Notes
                         to the Unaudited  Consolidated  Financial Statements in
                         this Form 10-QSB)

                    27   Financial Data Schedule (in electronic filing only)


          b)        Reports on Form 8-K

                    Not  applicable.

*    Incorporated  by reference to the  registrant's  Form 10-QSB filed with the
     SEC on November 16, 1998.

**   Incorporated  by reference to the  registrant's  Form 10-KSB filed with the
     SEC on June 25, 1999.




                                       14

<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: August 12, 1999                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.


/s/Walter G. Kelly                      /s/Carol A. Gilbert
-------------------------------------   ---------------------------------------
Walter G. Kelly                         Carol A. Gilbert
President and Chief Executive Officer   Chief Financial and Operating Officer
(Duly Authorized Representative)        and Treasurer (Principal Financial and
                                        Accounting Officer)


Date: August 12, 1999                        Date: August 12, 1999