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 December 31, 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 January 25, 2002


$0.10 Par Value Common Stock                             3,140,633
----------------------------                             ---------
          Class                                     Shares Outstanding

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

<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

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

Item 1.     Financial Statements

              Consolidated Statements of Financial Condition as of
              December 31, 2001 (unaudited) and March 31, 2001.................1

              Consolidated Statements of Income for the three and
              nine months ended December 31, 2001 and 2000 (unaudited))........2

              Consolidated Statement of Stockholders' Equity for the
              nine months ended December 31, 2001 (unaudited)..................3

              Consolidated Statements of Cash Flows for the nine
              months ended December 31, 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.................................................11
Item 2.     Changes in Securities.............................................11
Item 3.     Defaults Upon Senior Securities ..................................11
Item 4.     Submission of Matters to a Vote of Security-Holders...............11
Item 5.     Other Information.................................................11
Item 6.     Exhibits and Reports on Form 8-K .................................11


Signatures

<PAGE>
                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                    December 31,  March 31,
                                                                       2001         2001
                                                                    ---------    ---------
                    ASSETS                                          (Unaudited)
                    ------
<S>                                                               <C>          <C>
Cash and amounts due from depository institutions                   $     932    $   1,026
Interest-bearing deposits with other institutions                       6,860        8,186
Investment securities:
     Held-to-maturity (market value $17,875 and $25,972)               17,895       26,084
Mortgage-backed securities:
     Held-to-maturity (market value $71,880 and $56,551)               70,749       55,907
Loans receivable, net                                                  48,604       49,798
Accrued interest receivable:
     Investment securities                                                152          496
     Mortgage-backed securities                                           472          411
     Loans receivable                                                     413          452
Federal Home Loan Bank stock, at cost                                   2,615        2,615
Premises and equipment, net                                               538          577
Prepaid expenses and other assets                                       4,705        4,360
                                                                    ---------    ---------
        Total Assets                                                $ 153,935    $ 149,912
                                                                    =========    =========

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

Liabilities:
     Deposits                                                       $  77,750    $  73,399
     Federal Home Loan Bank advances                                   48,000       48,000
     Advances from borrowers for taxes and insurance                       66          107
     Accrued expenses and other liabilities                             3,483        3,304
                                                                    ---------    ---------
        Total Liabilities                                             129,299      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                                         9,778        9,745
     Treasury stock, at cost (320,423 shares at December 31, 2001
        and 304,694 shares at March 31, 2001)(1)                       (2,227)      (2,087)
     Unearned Employee Stock Ownership Plan (ESOP) shares                  --          (91)
     Unearned Restricted Stock Plan (RSP) shares                          (28)        (100)
     Retained earnings, substantially restricted                       16,768       17,290
                                                                    ---------    ---------
        Total Stockholders' Equity                                     24,636       25,102
                                                                    ---------    ---------
        Total Liabilities and Stockholders' Equity                  $ 153,935    $ 149,912
                                                                    =========    =========
</TABLE>

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

See accompanying notes to consolidated financial statements.

                                        1
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                        Consolidated Statements of Income

         For the Three and Nine months Ended December 31, 2001 and 2000

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                        Three Months Ended       Nine Months Ended
                                                           December 31,            December 31,
                                                       2001         2000         2001         2000
                                                    ----------   ----------   ----------   ----------
                                                          (unaudited)               (unaudited)
<S>                                               <C>          <C>          <C>          <C>
Interest income:
     Loans receivable                               $      844   $      983   $    2,614   $    3,029
     Mortgage-backed securities                            998          993        2,932        3,002
     Investment securities                                 261          500        1,064        1,431
     Other                                                 105           66          366          197
                                                    ----------   ----------   ----------   ----------
            Total interest income                        2,208        2,542        6,976        7,659

Interest expense:
     Deposits                                              811          840        2,505        2,487
     Federal Home Loan Bank advances                       670          692        2,004        2,036
                                                    ----------   ----------   ----------   ----------
            Total interest expense                       1,481        1,532        4,509        4,523
                                                    ----------   ----------   ----------   ----------
            Net interest income                            727        1,010        2,467        3,136

Provision for loan losses                                   --           --           --           --
                                                    ----------   ----------   ----------   ----------
           Net interest income after
              provision for loan losses                    727        1,010        2,467        3,136
Other income:
     Fees and service charges                               11            9           31           26
     Other                                                  40           13           81           40
                                                    ----------   ----------   ----------   ----------
            Total other income                              51           22          112           66

Other expenses:
     Compensation and employee benefits                    488          499        1,589        1,407
     Premises and occupancy costs                           48           51          145          158
     Federal insurance premiums                              3            4           10           12
     Other operating expenses                               71           67          211          227
                                                    ----------   ----------   ----------   ----------
            Total other expenses                           610          621        1,955        1,804
                                                    ----------   ----------   ----------   ----------
                Income before income taxes                 168          411          624        1,398

Provision for income taxes                                  15          159          174          526
                                                    ----------   ----------   ----------   ----------
            Net income                                     153          252          450          872

Other comprehensive income:
     Unrealized gain on securities available-for-
       sale, net of tax                                     --           --           --           --
                                                    ----------   ----------   ----------   ----------
            Total comprehensive income              $      153   $      252   $      450   $      872
                                                    ==========   ==========   ==========   ==========

Basic earnings per share                            $      .05   $      .08   $      .14   $      .28
Diluted earnings per share                          $      .05   $      .08   $      .14   $      .28

Weighted average shares outstanding - Basic          3,131,622    3,120,546    3,131,963    3,166,182
Weighted average shares outstanding - Diluted        3,194,080    3,125,455    3,179,498    3,169,082
</TABLE>

 See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Equity

             For the Nine months Ended December 31, 2001 (unaudited)

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                Additional                      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
  ($.36 per share regular,
   $.40 per share special)                 --          --          --          --          --        (893)       (893)

Dividend charged to retained
 earnings for ESOP                         --          --          --          --          --         (79)        (79)

Excess of fair value above cost of
 ESOP shares released or
 committed to be released                  --          33          --          --          --          --          33

Amortization of ESOP liability             --          --          --          91          --          --          91

Amortization of RSP liability              --          --          --          --          72          --          72

Treasury stock purchased,
 at cost (15,729 shares)                   --          --        (140)         --          --          --        (140)

Net income                                 --          --          --          --          --         450         450
                                     --------------------------------------------------------------------------------

Balance at December 31, 2001         $    345    $  9,778    $ (2,227)   $     --    $    (28)   $ 16,768    $ 24,636
                                     ================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                        3
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

              For the Nine months Ended December 31, 2001 and 2000

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                       2001        2000
                                                                                       ----        ----
                                                                                         (unaudited)
<S>                                                                              <C>         <C>
Operating activities:
     Net income                                                                    $    450    $    872
     Adjustments to reconcile net income to net cash
        provided by operating activities:
           Depreciation                                                                  48          56
           Compensation expense-ESOP and RSP                                            196         221
           Net amortization (accretion) of premiums and discounts                      (227)         99
           Decrease in accrued interest receivable                                      322          15
           Increase in prepaid expenses                                                (345)       (766)
           Decrease in accrued interest payable                                        (150)       (138)
           Decrease in accrued income taxes                                            (190)        (11)
           Other, net                                                                   516          49
                                                                                   --------    --------
               Net cash provided by operating activities                                620         397
                                                                                   --------    --------
Investing activities:
     Purchases of premises and equipment                                                 (9)        (24)
     Purchases of investment securities held-to-maturity                             (8,600)     (3,133)
     Purchases of mortgage-backed securities held-to-maturity                       (31,784)     (3,510)
     Proceeds from maturities/calls and principal repayments of:
        Investment securities held-to-maturity                                       16,780       1,059
        Mortgage-backed securities held-to-maturity                                  17,127       7,719
     Loans purchased                                                                (10,875)     (2,346)
     Net principal repayments on loans                                               12,123       5,764
                                                                                   --------    --------
                Net cash provided by (used in) investing activities                  (5,238)      5,529
                                                                                   --------    --------
Financing activities:
     Net increase (decrease)  in deposits                                             4,351      (2,612)
     Proceeds from Federal Home Loan Bank advances                                       --      24,000
     Repayment of Federal Home Loan Bank advances                                        --     (25,000)
     Net decrease in mortgage escrow                                                    (41)        (16)
     Treasury stock purchased                                                          (140)       (952)
     Cash dividends paid                                                               (972)       (354)
                                                                                   --------    --------
               Net cash provided by (used in) financing activities                    3,198      (4,934)
                                                                                   --------    --------
Net increase (decrease) in cash and cash equivalents                                 (1,420)        992
Cash and cash equivalents, beginning of period                                        9,212       1,726
                                                                                   --------    --------
Cash and cash equivalents, end of period                                           $  7,792    $  2,718
                                                                                   ========    ========
Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
        Interest                                                                   $  4,658    $  4,661
                                                                                   ========    ========
        Income taxes                                                               $    357    $    643
                                                                                   ========    ========
</TABLE>
See accompanying notes to consolidated financial statements

                                        4
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY
                   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 and nine months ended  December
31, 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 December 13, 2001, the Board of Directors of the Company declared a $0.12 per
share  regular cash  dividend and a $0.20 per share special cash dividend on the
Company's  outstanding shares of common stock, payable to stockholders of record
as of December 31, 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 January
15, 2002. 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  December 31, 2001 and 2000,  the  Company's  total
comprehensive income was $153,000 and $252,000,  respectively,  and $450,000 and
$872,000,  respectively,  for the nine months ended  December 31, 2001 and 2000.
Total  comprehensive  income is comprised of net income and other  comprehensive
income. For both three and nine month periods ended December 31, 2001, 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 SUBSIDIARY
                   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         Nine Months Ended
                               ------------------------- -------------------------

                               December 31, December 31, December 31, December 31,
                                  2001         2000         2001         2000
                               ----------   ----------   ----------   ----------
<S>                          <C>          <C>          <C>          <C>
Basic EPS computation:
 Numerator-Net Income          $  153,000   $  252,000   $  450,000   $  872,000
 Denominator-Wt Avg common
 shares outstanding             3,131,622    3,120,546    3,131,963    3,166,182
Basic EPS                      $      .05   $      .08   $      .14   $      .28
                               ==========   ==========   ==========   ==========

Diluted EPS computation:
 Numerator-Net Income          $  153,000   $  252,000   $  450,000   $  872,000
 Denominator-Wt Avg
   common shares outstanding    3,131,622    3,120,546    3,131,963    3,166,182
 Dilutive Stock Options            57,339        4,909       44,925        2,900
 Dilutive Unvested RSP              5,119           --        2,610           --
                               ----------   ----------   ----------   ----------
 Weighted avg common shares
  and common stock
    equivalents                 3,194,080    3,125,455    3,179,498    3,169,082
Diluted EPS                    $      .05   $      .08   $      .14   $      .28
                               ==========   ==========   ==========   ==========
</TABLE>

Shares  outstanding for the three and nine months ended December 31, 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 18,235 at December 31, 2000.

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 $153,935,000 at December 31, 2001, are reflective
of an increase of $4,023,000 or 2.7%, as compared to  $149,912,000  at March 31,
2001.  The  increase in total  assets was due to  increases  in  mortgage-backed
securities  and prepaid  expenses and other assets,  offset by decreases in cash
and amounts  due from  depository  institutions,  loans  receivable,  investment
securities, accrued interest receivable, and premises and equipment.

The  increase  in the  Company's  liabilities  was due to  increases  in savings
deposits  and accrued  expenses  and other  liabilities,  offset by decreases in
escrows.  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  $7,792,000,  a
decrease of $1,420,000 or 15.4% as compared to $9,212,000 at March 31, 2001.

Investment Securities. Investment securities totaled $17,895,000 at December 31,
2001, a decrease of $8,189,000 or 31.4%, as compared to $26,084,000 at March 31,
2001.  This was  primarily  a result  of  proceeds  from  maturities,  calls and
repayments  totaling $16.8 million,  offset by purchases of $8.6 million of U.S.
Agency securities.

Mortgage-backed  Securities.  Mortgage-backed  securities  were  $70,749,000  at
December  31,  2001,  an  increase  of  $14,842,000  or 26.5%,  as  compared  to
$55,907,000  at March 31,  2001.  The  increase  was due to  purchases  of $31.8
million, offset by principal repayments and maturities totaling $17.1 million.

Loans  Receivable,  net.  Net loans  receivable  at December  31,  2001  totaled
$48,604,000,  a decrease of $1,194,000 or 2.4%,  as compared to  $49,798,000  at
March 31, 2001. The decrease was primarily due to principal  repayments totaling
$12.5 million,  offset by originations of $334,000,  which includes  $237,000 of
consumer and $97,000 of one-to-four  family and purchases of $10.9 million.  The
Company purchased $3.6 million  conventional one -to four-family  mortgage loans
and  $887,000  insured  Federal  Housing  Administration  ("FHA")  and  Veterans
Administration  ("VA")  one- to  four-family  mortgage  loans  within its normal
lending area. The Company also  purchased $2.1 million United States  Department
of  Agriculture   ("USDA")   mortgage   loans,   $2.9  million  USDA  commercial
non-mortgage  loans  and  $369,000  Government  National  Mortgage   Association
("GNMA") project  multi-family project loans, and $1.0 million of Small Business
Administration (SBA) loans primarily outside its normal lending area.

Deposits. Total deposits, after interest credited,  increased by $4.4 million or
5.9% to  $77,750,000  at December 31, 2000, as compared to  $73,399,000 at March
31, 2001.

FHLB Advances.  FHLB advances totaled  $48,000,000 at both December 31, 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 $24,636,000 at December 31,
2001, as compared to  $25,102,000 at March 31, 2001. The decrease of $466,000 or
1.9% was primarily due to the purchase of 15,130 shares of treasury  stock at an
average  cost of $8.92 per share,  and the  payment of three $.12  regular  cash
dividends and two $.20 special cash dividend,  partially  offset by earnings for
the nine months ended December 31, 2001.

                                        7
<PAGE>

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


Results of Operations for the Three Months Ended December 31, 2001 and 2000

Net Income.  The Company  recorded  net income of $153,000  for the three months
ended  December  31,  2001,  as compared to net income of $252,000 for the three
months ended  December 31, 2000. The $99,000 or 39.3% decrease in net income for
the three months ended  December 31, 2001 was primarily the result of a decrease
in net interest  income,  partially offset by a decrease in provision for income
taxes. Changes in the components of income and expense are discussed herein.

Net Interest  Income.  Net interest income  decreased  $283,000 or 28.0% for the
three  months ended  December  31,  2001,  as compared to the three month period
ended December 31, 2000. Although the average balance of interest-earning assets
increased $4.2 million or 2.9%,  the average yield earned thereon  decreased 112
basis points. The average balance of interest-bearing liabilities increased $3.7
million or 3.1%,  however,  the average  rate paid  thereon  decreased  32 basis
points.

The net  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 1.24% for the three month  period ended  December 31,
2001 from 2.04% for the three month period ended December 31, 2000. The decrease
in the net interest rate spread was primarily the result of decreased  yields on
the average balances of interest earning assets,  offset by decreased rates paid
on the average balance of savings deposits and FHLB advances.

Interest Income.  Interest income decreased  $334,000 or 13.1% to $2,208,000 for
the three month period ended  December 31, 2001, as compared to  $2,542,000  for
the three month period ended December 31, 2000.

Interest on loans  receivable  decreased  $139,000 or 14.1% for the three months
ended  December 31, 2001,  as compared to the three month period ended  December
31, 2000.  This decrease was primarily the result of a $5.1 million  decrease in
the average  balance of loans  receivable  and a 38 basis point  decrease in the
average yield earned thereon.

Interest income on  mortgage-backed  securities  increased by $5,000 or 0.5% for
the three months ended  December 31, 2001, as compared to the three months ended
December 31, 2000. The increase in interest income on mortgage-backed securities
was primarily due to an $11.3 million higher average balance of such securities,
offset by a 117 basis point decrease in the average yield earned thereon.

Interest income on investment  securities decreased by $239,000 or 47.8% for the
three  months ended  December  31,  2001,  as compared to the three months ended
December 31, 2000. The decrease in interest income on investment  securities was
primarily  due to a  $11.5  million  decrease  in the  average  balance  of such
securities and a 92 basis point decrease in the average yield earned thereon.

Interest income on other  interest-earning  assets increased by $39,000 or 59.1%
for the three  months ended  December 31, 2001,  as compared to the three months
ended December 31, 2000. The increase was due to a $9.4 million  increase in the
average balance of other  interest-earning  assets,  offset by a 294 basis point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 6.02%
and 7.14 % for the  three  month  periods  ended  December  31,  2001 and  2000,
respectively.

Interest Expense. Interest expense totaled $1,481,000 for the three months ended
December 31, 2001, as compared to $1,532,000 for the three months ended December
31, 2000. Although the average balance of interest-bearing liabilities increased
$3.7 million, the average rate paid thereon decreased 32 basis points, resulting
in a $51,000 or 3.3% decrease in interest expense.

Interest expense on deposits  (including  escrows) decreased $29,000 or 3.5% for
the three months ended  December 31, 2001, as compared to the three months ended
December  31, 2000.  The  decrease  was due to a 43 basis point  decrease in the
average  rate paid  thereon,  offset by a $4.4  million  increase in the average
balance of deposits.

Interest on FHLB advances  decreased  $22,000 or 3.2% for the three months ended
December 31, 2001, as compared to the three months ended  December 31, 2000. The
decrease  was due to a 11 basis  point  decrease in the rate paid  thereon.  The
Company uses FHLB advances as a funding source 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 OPERATION


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 ended December 31, 2001 and 2000.

At December 31, 2001, the allowance for loan losses totaled $425,000 or .87% and
376.1% of total loans and total non-performing loans, respectively,  as compared
to  $425,000  or 0.85%  and  1,416.7%,  respectively,  at March  31,  2001.  The
Company's non-performing loans (non- accrual loans and accruing loans 90 days or
more  overdue)  totaled  $113,000 and $30,000 at December 31, 2001 and March 31,
2001,  respectively,  which  represented  0.23% and 0.06% of the Company's total
loans, respectively. The Company's ratio of non-performing loans to total assets
was .07% and .02% at December 31, 2001 and March 31, 2001, respectively.

Other  Income.  During the three  months ended  December 31, 2001,  other income
increased  $29,000 or 131.8%, as compared to the three months ended December 31,
2000.

Other  Expenses.  Total other  expenses  decreased by $11,000 or 1.8% during the
three  months ended  December  31,  2001,  as compared to the three months ended
December 31, 2000. The decrease was attributable to decreases of $11,000 or 2.2%
in compensation and employee  benefits  expense,  $3,000 or 5.9% in premises and
occupancy costs, and $1,000 or 25.0% in federal insurance premiums,  offset by a
$4,000 or 6.0% increase in other operating expense.

Income Tax Expense.  The provision for income tax totaled  $15,000 for the three
months ended  December  31,  2001,  as compared to $159,000 for the three months
ended  December  31, 2000.  The $144,000 or 90.6%  decrease was due to decreased
income.

Results of Operations for the Nine Months Ended December 31, 2001 and 2000

Net Income.  The  Company  recorded  net income of $450,000  for the nine months
ended  December  31,  2001,  as compared to net income of $872,000  for the nine
months ended December 31, 2000. The $422,000 or 48.4% decrease in net income for
the nine months ended December 31, 2001 was primarily the result of decreases in
net interest  income and  increases  in other  expenses,  partially  offset by a
decrease in provision for income taxes.  Changes in the components of income and
expense are discussed herein.

Net Interest  Income.  Net interest income  decreased  $669,000 or 21.3% for the
nine months ended  December 31, 2001, as compared to the nine month period ended
December  31,  2000.  Although the average  balance of  interest-earning  assets
increased $1.8 million or 1.3%,  the average yield earned  thereon  decreased 72
basis points. The average balance of interest-bearing  liabilities  increased by
$1.5 million or 1.2%,  however,  the average rate paid thereon decreased 8 basis
points.

The net  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 1.49% for the three month  period ended  December 31,
2001 from 2.13% for the three month period ended December 31, 2000. The decrease
in the net interest rate spread was primarily the result of decreased  yields on
the average balances of interest  earning assets,  partially offset by decreased
rates paid on the average balance of savings deposits.

Interest Income.  Interest income  decreased  $683,000 or 8.9% to $6,976,000 for
the nine month period ended December 31, 2001, as compared to $7,659,000 for the
nine month period ended December 31, 2000.

Interest  on loans  receivable  decreased  $415,000 or 13.7% for the nine months
ended December 31, 2001, as compared to the nine month period ended December 31,
2000.  This decrease was primarily the result of a $5.3 million  decrease in the
average balance of loans receivable and a 33 basis point decrease in the average
yield earned thereon.

Interest income on mortgage-backed  securities decreased $70,000 or 2.3% for the
nine months  ended  December  31,  2001,  as  compared to the nine months  ended
December 31, 2000.  This  decrease was  primarily the result of a 63 basis point
decrease in the average yield earned on  mortgage-backed  securities,  partially
offset by a $4.1 million increase in the average balance of such securities.

Interest  income on investment  securities  decreased  $367,000 or 25.6% for the
nine months  ended  December  31,  2001,  as  compared to the nine months  ended
December 31, 2000. The decrease in interest income on investment  securities was
primarily  due  to a $5.5  million  decrease  in the  average  balance  of  such
securities and a decrease in the average yield of 49 basis points.

Interest income on other interest-earning  assets increased by $169,000 or 85.8%
for the nine months  ended  December  31,  2001,  as compared to the nine months
ended December 31, 2000. The increase was due to a $8.5 million  increase in the
average balance of other  interest-earning  assets,  offset by a 272 basis point
decrease in the average yield earned thereon.

                                        9

<PAGE>

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


The average yield on the average  balance of  interest-earning  assets was 6.39%
and  7.11%  for the nine  month  periods  ended  December  31,  2001  and  2000,
respectively.

Interest Expense.  Interest expense totaled $4,509,000 for the nine months ended
December 31, 2001, as compared to $4,523,000  for the nine months ended December
31, 2000. Although the average balance of interest-bearing liabilities increased
$1.5 million, the average rate paid thereon decreased 8 basis points,  resulting
in a $14,000 or 0.3% decrease in interest expense.

Interest expense on deposits  (including  escrows) increased $18,000 or 0.7% for
the nine months ended  December  31, 2001,  as compared to the nine months ended
December  31,  2000.  The  increase  was due to a $2.3  million  increase in the
average balance of deposits,  offset by a 12 basis point decrease in the average
rate paid thereon

Interest on FHLB  advances  decreased  $32,000 or 1.6% for the nine months ended
December 31, 2001, as compared to the nine months ended  December 31, 2000.  The
decrease  was due to a $833,000  decrease  in the average  balance of  advances,
offset by a 1 basis point increase in the average rate paid thereon.

Provision 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  provision  for loan  losses  during the nine month
periods ended December 31, 2001 and 2000.

Other  Income.  During the nine months ended  December  31,  2001,  other income
increased  $46,000 or 69.7%,  as compared to the nine months ended  December 31,
2000.

Other  Expenses.  Total other expenses  increased by $151,000 or 8.4% during the
nine months  ended  December  31,  2001,  as  compared to the nine months  ended
December 31, 2000. The increase was  attributable  to an increase of $182,000 in
compensation and employees  benefit  expense,  offset by decreases of $16,000 in
other expenses,  $13,000 in premises and occupancy  costs, and $2,000 in federal
insurance  premiums.  The increase in compensation and employee benefits expense
was due to increases of $117,000 in the Company's defined benefit plan, SERP and
DRP costs and $90,000 in compensation and employee benefits  expense,  offset by
decreases of $21,000 in ESOP expense and $4,000 in RSP expense. The Bank adopted
an amendment  to the SERP which  included a  definition  of attained  age, and a
revision  to the  benefit  formula  whereas  the  benefit  payable  shall now be
one-twelfth  times eighty  percent  times an Eligible  Employees'  Final Average
Compensation,  less the monthly benefit payable under the Pension Plan times the
percentage  resulting from one hundred percent less twelve and one-half  percent
times the number of years that the Eligible  Employees' attained age exceeds age
55. It is  anticipated  that the cost  related  to the SERP  amendment  shall be
$285,000, thereby resulting in a total cost for calendar year 2002 of $609.000.

Income Tax Expense.  The provision for income tax totaled  $174,000 for the nine
months  ended  December  31,  2001,  as compared to $526,000 for the nine months
ended  December  31, 2000.  The $352,000 or 66.9%  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 December 31, 2001, the Bank was in compliance with its
three regulatory capital requirements as follows:


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

Tangible capital.........................        $24,434          15.89%
Tangible capital requirement.............          2,307            1.50
                                                 -------          -----
Excess over requirement..................        $22,127          14.39%
                                                 =======          =====

Core capital.............................        $24,434          15.89%
Core capital requirement.................          4,614            3.00
                                                 -------          -----
Excess over requirement..................        $19,820          12.89%
                                                 =======          =====

Risk based capital.......................        $24,859          57.79%
Risk based capital requirement...........          3,441            8.00
                                                 -------          -----
Excess over requirement..................        $21,418          49.79%
                                                 =======          =====


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.

                                       10
<PAGE>

                           PART II - OTHER INFORMATION

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

               The Company's  subsidiary  First Carnegie Deposit and other third
               parties have been 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


                                       11
<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: January 25, 2002
                                       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: January 25,  2002                   Date: January 25, 2002

</TABLE>

                                       12