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 September 30, 2002
                               ------------------

|_|  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 October 28, 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 SUBSIDIARIES

                                TABLE OF CONTENTS
                                                                            Page
                                                                            ----



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


Item 1.     Financial Statements


              Consolidated Statements of Financial Condition as of
              September 30, 2002 (unaudited) and March 31, 2002...............1

              Consolidated Statements of Income for the three and
                   six months ended September 30, 2002 and 2001 (unaudited)...2

              Consolidated Statement of Stockholders' Equity for the
              six months ended September 30, 2002 (unaudited).................3

              Consolidated Statements of Cash Flows for the six
              months ended September 30, 2002 and 2001 (unaudited)............4

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


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


Item 3.     Controls and Procedures..........................................11


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


Item 1.     Legal Proceedings................................................12
Item 2.     Changes in Securities............................................12
Item 3.     Defaults Upon Senior Securities .................................12
Item 4.     Submission of Matters to a Vote of Security-Holders..............12
Item 5.     Other Information................................................12
Item 6.     Exhibits and Reports on Form 8-K ................................12


Signatures

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                    September 30,  March 31,
                                                                        2002         2002
                                                                     ---------     --------
                    ASSETS                                          (Unaudited)
                    ------
<S>                                                                <C>          <C>
Cash and amounts due from depository institutions                    $     718    $     530
Interest-bearing deposits with other institutions                        2,345        4,047
Investment securities:
     Held-to-maturity (market value $12,362 and $17,184)                12,249       17,421
Mortgage-backed securities:
     Held-to-maturity (market value $88,897 and $79,120)                86,827       78,064
Loans receivable, net                                                   45,298       45,865
Accrued interest receivable:
     Investment securities                                                 144          215
     Mortgage-backed securities                                            510          502
     Loans receivable                                                      400          423
Federal Home Loan Bank stock, at cost                                    2,435        2,400
Premises and equipment, net                                                507          531
Prepaid expenses and other assets                                        5,332        5,120
                                                                     ---------    ---------
        Total Assets                                                 $ 156,765    $ 155,118
                                                                     =========    =========

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

Liabilities:
     Deposits                                                        $  80,034    $  78,520
     Federal Home Loan Bank advances                                    48,000       48,000
     Advances from borrowers for taxes and insurance                         4          117
     Accrued expenses and other liabilities                              4,754        3,870
                                                                     ---------    ---------
        Total Liabilities                                              132,792      130,507


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        9,778
     Treasury stock, at cost (321,181 shares at September 30, 2002
         and 320,423 shares at March 31, 2002)(1)                       (2,237)      (2,227)
     Unearned Restricted Stock Plan ("RSP") shares                          --           (4)
     Retained earnings, substantially restricted                        16,087       16,719
                                                                     ---------    ---------
        Total Stockholders' Equity                                      23,973       24,611
                                                                     ---------    ---------

        Total Liabilities and Stockholders' Equity                   $ 156,765    $ 155,118
                                                                     =========    =========
</TABLE>

(1)Included are shares held by the Bank's RSP totaling  11,840 at September  30,
   2002 and 11,082 at March 31, 2002, respectively.


See accompanying notes to consolidated financial statements.

                                        1
<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                        Consolidated Statements of Income

         For the Three and Six Months Ended September 30, 2002 and 2001

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                         Three Months Ended         Six Months Ended
                                                              September 30,           September 30,
                                                         2002         2001         2002         2001
                                                      ----------   ----------   ----------   ----------
                                                             (unaudited)            (unaudited)
<S>                                                 <C>          <C>          <C>          <C>
Interest income:
     Loans receivable                                 $      768   $      871   $    1,552   $    1,770
     Mortgage-backed securities                            1,112          969        2,226        1,934
     Investment securities                                   193          380          438          803
     Other                                                    36          123           66          261
                                                      ----------   ----------   ----------   ----------
            Total interest income                          2,109        2,343        4,282        4,768

Interest expense:
     Deposits                                                701          846        1,411        1,694
     Federal Home Loan Bank advances                         671          671        1,334        1,334
                                                      ----------   ----------   ----------   ----------
            Total interest expense                         1,372        1,517        2,745        3,028
                                                      ----------   ----------   ----------   ----------

            Net interest income                              737          826        1,537        1,740

Provision for loan losses                                     --           --           --           --
                                                      ----------   ----------   ----------   ----------
            Net interest income after
              provision for loan losses                      737          826        1,537        1,740

Other income:
     Fees and service charges                                 12           10           28           20
     Other                                                    33            9           68           41
                                                      ----------   ----------   ----------   ----------
            Total other income                                45           19           96           61

Other expenses:
     Compensation and employee benefits                      534          505        1,070        1,101
     Premises and occupancy costs                             43           49           92           97
     Federal insurance premiums                                3            3            7            7
     Other operating expenses                                 74           55          150          140
                                                      ----------   ----------   ----------   ----------
            Total other expenses                             654          612        1,319        1,345
                                                      ----------   ----------   ----------   ----------

               Income before income taxes                    128          233          314          456

Provision for income taxes                                    30           74          101          159
                                                      ----------   ----------   ----------   ----------
            Net income                                        98          159          213          297

Other comprehensive income:
       Unrealized gain on securities available-for-
          sale, net of tax                                    --           --           --           --
                                                      ----------   ----------   ----------   ----------
               Total comprehensive income             $       98   $      159   $      213   $      297
                                                      ==========   ==========   ==========   ==========


Basic earnings per share                              $      .03   $      .05   $      .07   $      .09
Diluted earnings per share                            $      .03   $      .05   $      .07   $      .09

Weighted average shares outstanding - Basic            3,140,633    3,133,269    3,140,004    3,132,137
Weighted average shares outstanding - Diluted          3,212,631    3,189,077    3,212,585    3,172,212
</TABLE>


See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                                 SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                             Consolidated Statement of Stockholders' Equity

                         For the Six Months Ended September 30, 2002 (unaudited)

                          (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                            Additional                     Unearned
                                Common       Paid-in        Treasury          RSP       Retained
                                 Stock       Capital          Stock         Shares      Earnings      Total
                                 -----       -------          -----         ------      --------      -----

<S>                             <C>          <C>            <C>              <C>       <C>         <C>
Balance at March 31, 2002         $345         $9,778         $(2,227)         $(4)      $16,719     $24,611

Cash dividends declared, net
  ($.24 per share regular,
   $.44 per share special)          --             --              --           --          (845)       (845)

Amortization of RSP liability       --             --              --            4            --           4

Treasury stock purchased,
  at cost (758 shares)              --             --             (10)          --            --         (10)

Net income                          --             --              --           --           213         213
                                  ----        -------         -------         ----       -------     -------

Balance at September 30, 2002     $345         $9,778         $(2,237)        $ --       $16,087     $23,973
                                  ====        =======         =======         ====       =======     =======

</TABLE>

See accompanying notes to consolidated financial statements.

                                                            3

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

              For the Six Months Ended September 30, 2002 and 2001

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                     2002        2001
                                                                                   --------    --------
                                                                                        (Unaudited)
<S>                                                                              <C>         <C>
Operating activities:
     Net income                                                                    $    213    $    297
     Adjustments to reconcile net income to net cash
        (used in) provided by operating activities:
           Depreciation                                                                  26          33
           Compensation expense-Employee Stock
              Ownership Plan ("ESOP") and RSP                                             4         150
           Net accretion of premiums and discounts                                      (97)        (77)
           Decrease in accrued interest receivable                                       86          22
           Increase in prepaid expenses                                                (212)       (320)
           Increase in accrued interest payable                                         268         298
           Increase in accrued income taxes                                              84         102
           Other, net                                                                   526         517
                                                                                   --------    --------
             Net cash provided by operating activities                                  898       1,022
                                                                                   --------    --------

Investing activities:
     Purchases of premises and equipment                                                 (2)         (9)
     Purchases of investment securities held-to maturity                               (715)     (1,170)
     Purchases of mortgage-backed securities held-to-maturity                       (21,919)    (15,283)
     Proceeds from maturities/calls and principal repayments of:
        Investment securities held-to-maturity                                        5,887       4,782
        Mortgage-backed securities held-to-maturity                                  13,145      11,010
     Loans purchased                                                                 (4,259)     (6,903)
     Net principal repayments on loans                                                4,940       6,913
      Increase in Federal Home Loan Bank stock                                          (35)         --
                                                                                   --------    --------
             Net cash used in investing activities                                   (2,958)       (660)
                                                                                   --------    --------

Financing activities:
     Net increase in deposits                                                         1,514       3,004
     Net decrease in mortgage escrow                                                   (113)        (94)
     Treasury stock purchased                                                           (10)       (140)
     Cash dividends paid                                                               (845)       (495)
                                                                                   --------    --------
                Net cash provided by financing activities                               546       2,275
                                                                                   --------    --------

Net (decrease) increase in cash and cash equivalents                                 (1,514)      2,637
Cash and cash equivalents, beginning of period                                        4,577       9,212
                                                                                   --------    --------
Cash and cash equivalents, end of period                                           $  3,063    $ 11,849
                                                                                   ========    ========

Supplemental  disclosures of cash flow information:
     Cash paid during the period for:
        Interest                                                                   $  2,477    $  2,729
                                                                                   ========    ========

        Income taxes                                                               $    136    $     88
                                                                                   ========    ========
</TABLE>

See accompanying notes to consolidated financial statements

                                        4

<PAGE>

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



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

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

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

The results of  operations  for the three months and six months ended  September
30, 2002 are not  necessarily  indicative  of the results to be expected for the
year  ending  March 31, 2003 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,
2002.

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

On September  13, 2002,  the Board of Directors of the Company  declared a $0.12
per share  regular cash  dividend and a $0.14 per share special cash dividend on
the Company's  outstanding  shares of common stock,  payable to  stockholders of
record as of September 30, 2002. 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 October
15, 2002.  Under current  regulations of the Office of Thrift  Supervision  (the
"OTS"), any waiver of dividends by the M.H.C. will no longer cause 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  September  30, 2002 and 2001,  the  Company's  total
comprehensive  income was $98,000 and $159,000,  respectively,  and $213,000 and
$297,000,  respectively,  for the six months ended  September 30, 2002 and 2001.
Total  comprehensive  income is comprised of net income and other  comprehensive
income.  For both three and six month periods ended September 30, 2002 and 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 SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (Unaudited)




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

<TABLE>
<CAPTION>
                                  Three Months Ended               Six Months Ended
                               --------------------------      --------------------------
                              September 30,   September 30,   September 30,   September 30,
                                  2002            2001            2002            2001
                               ----------      ----------      ----------      ----------
<S>                          <C>             <C>             <C>             <C>
Basic EPS computation:
 Numerator-Net Income          $   98,000      $  159,000      $  213,000      $  297,000
 Denominator-Wt Avg common
 shares outstanding             3,140,633       3,133,269       3,140,004       3,132,137
Basic EPS                      $      .03      $      .05      $      .07      $      .09
                               ==========      ==========      ==========      ==========

Diluted EPS computation:
 Numerator-Net Income          $   98,000      $  159,000      $  213,000      $  297,000
 Denominator-Wt Avg
   common shares outstanding    3,140,633       3,133,269       3,140,004       3,132,137
 Dilutive Stock Options            71,998          53,095          72,581          38,718
 Dilutive Unvested RSP                 --           2,713              --           1,357
                               ----------      ----------      ----------      ----------
 Weighted avg common shares
  and common stock
    equivalents                 3,212,631       3,189,077       3,212,585       3,172,212
Diluted EPS                    $      .03      $      .05      $      .07      $      .09
                               ==========      ==========      ==========      ==========

</TABLE>

Shares  outstanding for the three and six months ended September 30, 2001 do not
include 2,026 ESOP shares that were  unallocated in accordance with Statement of
Position  ("SOP") 93-6,  "Employers'  Accounting for Employees  Stock  Ownership
Plans".

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 $156,765,000 at September 30, 2002, are reflective
of an increase of $1,647,000 or 1.1%, as compared to  $155,118,000  at March 31,
2002.  The  increase in total  assets was due to  increases  in  mortgage-backed
securities, Federal Home Loan Bank stock, prepaid expenses, and cash and amounts
due from depository institutions,  offset by decreases in investment securities,
accrued interest receivable,  premises and equipment,  interest bearing deposits
with other financial institutions, and loans receivable.

The  increase  in the  Company's  liabilities  was due to  increases  in savings
deposits  and accrued  expenses and other  liabilities,  offset by a decrease in
advances from  borrowers for taxes and  insurance.  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  $3,063,000,  a
decrease of  $1,514,000  or 33.1%,  as compared to $4,577,000 at March 31, 2002.
This decrease was due to decreased  interest-bearing  deposits maintained at the
Federal  Home  Loan  Bank and cash on hand,  offset  by  increased  non-interest
bearing deposits  maintained at both the Federal Reserve Bank of Cleveland and a
local bank.

Investment  Securities.  Investment  securities totaled $12,249,000 at September
30, 2002, a decrease of $5,172,000 or 29.7%, as compared to $17,421,000 at March
31, 2002. The decrease was primarily due to proceeds from maturities,  calls and
payments  totaling $5.9 million,  offset by purchases of $715,000 of U.S. Agency
REMIC securities.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $86,827,000 at
September  30,  2002,  an  increase  of  $8,763,000  or 11.2%,  as  compared  to
$78,064,000  at March 31, 2002.  The increase was  primarily due to purchases of
$21.9 million,  partially offset by principal repayments and maturities totaling
$13.1 million.

Loans  Receivable,  net.  Net loans  receivable  at  September  30, 2002 totaled
$45,298,000, a decrease of $567,000 or 1.2%, as compared to $45,865,000 at March
31, 2002. The decrease was primarily due to principal  repayments  totaling $5.2
million,  offset by originations of $286,000 and purchases of $4.3 million.  The
Company  originated  $286,000 consumer loans within its normal lending area. The
Company purchased $2.4 million  conventional one- to four-family  mortgage loans
and $1.3 million  insured Federal  Housing  Administration  ("FHA") and Veterans
Administration  ("VA")  one- to  four-family  mortgage  loans  within its normal
lending area. The Company also purchased $104,000  Government  National Mortgage
Association  ("GNMA")  project loans and $461,000  United  States  Department of
Agriculture ("USDA") mortgage loans primarily outside its normal lending area.

Deposits. Total deposits, after interest credited,  increased $1,514,000 or 1.9%
to  $80,034,000  at September 30, 2002, as compared to  $78,520,000 at March 31,
2002. The increase was due to increases in certificates of deposit, passbook and
Money Market accounts,  offset by decreases in interest-bearing and non-interest
bearing checking accounts.

FHLB Advances.  FHLB advances totaled $48,000,000 at both September 30, 2002 and
March 31, 2002.  The Company uses FHLB  advances as a supplement  to deposits to
fund its purchase of loans and investments.

Stockholders' Equity.  Stockholders' equity totaled $23,973,000 at September 30,
2002, as compared to  $24,611,000 at March 31, 2002. The decrease of $638,000 or
2.6% was primarily due to the payment of two $0.12 regular cash  dividends,  one
$0.30  special cash  dividend,  and one $0.14 special cash  dividend,  partially
offset by earnings for the six months ended September 30, 2002.

                                        7

<PAGE>

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


Results of Operations for the Three Months Ended September 30, 2002 and 2001

Net Income.  The  Company  recorded  net income of $98,000 for the three  months
ended  September  30, 2002,  as compared to net income of $159,000 for the three
months ended September 30, 2001. The $61,000 or 38.4% decrease in net income for
the three  months ended  September  30, 2002 was the result of a decrease in net
interest  income  and an  increase  in other  expenses,  partially  offset  by a
decrease in the  provision  for income  taxes and an  increase in other  income.
Changes in the components of income and expense are discussed herein.

Net Interest  Income.  Net interest  income  decreased  $89,000 or 10.8% for the
three months  ended  September  30, 2002,  as compared to the three month period
ended  September  30,  2001.  Although the average  balance of  interest-earning
assets  increased  $3.3  million  or 2.3%,  the  average  yield  earned  thereon
decreased 77 basis points. The average balance of  interest-bearing  liabilities
increased  by $3.8  million or 3.1%,  however,  the  average  rate paid  thereon
decreased 60 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 1.33% for the three month period ended  September 30,
2002 from  1.50% for the three  month  period  ended  September  30,  2001.  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  $234,000 or 10.0% to $2,109,000 for
the three month period ended  September 30, 2002, as compared to $2,343,000  for
the three month period ended September 30, 2001.

Interest on loans  receivable  decreased  $103,000 or 11.8% for the three months
ended  September 30, 2002, as compared to the three month period ended September
30, 2001.  This decrease was primarily the result of a $4.9 million  decrease in
the average  balance of loans  receivable  and a 16 basis point  decrease in the
average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $143,000 or 14.8% for
the three months ended September 30, 2002, as compared to the three months ended
September  30, 2001.  This  increase was primarily the result of a $25.0 million
increase in the average balance of mortgage-backed  securities,  offset by a 125
basis point decrease in the average yield earned thereon.

Interest  income on investment  securities  decreased  $187,000 or 49.2% for the
three months  ended  September  30, 2002,  as compared to the three months ended
September 30, 2001. The decrease in interest income on investment securities was
primarily  due  to a $9.9  million  decrease  in the  average  balance  of  such
securities and a 81 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning  assets decreased $87,000 or 70.7% for
the three months ended September 30, 2002, as compared to the three months ended
September 30, 2001. The decrease was primarily due to a $6.9 million decrease in
the  average  balance of other  interest-earning  assets  and a 137 basis  point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 5.66%
and  6.43%  for the three  month  periods  ended  September  30,  2002 and 2001,
respectively.

Interest Expense.  Interest expense decreased $145,000 or 9.6% to $1,372,000 for
the three month period ended  September 30, 2002, as compared to $1,517,000  for
the three month period ended September 30, 2001. Although the average balance of
interest-bearing  liabilities  increased  $3.8  million,  the average  rate paid
thereon decreased 60 basis points.

Interest expense on deposits  (including escrows) totaled $701,000 for the three
months  ended  September  30, 2002 as compared to $846,000  for the three months
ended  September 30, 2001. The $145,000 or 17.1% decrease was primarily due to a
95 basis point decrease in the average rate paid on deposits,  partially  offset
by a $3.8 million increase in the average balance of deposits and escrows.

Interest on FHLB  advances  totaled  $671,000 for both three month periods ended
September 30, 2002 and 2001.  The Company uses FHLB advances as a funding source
and to supplement deposits, which are the Company's primary source of funds.

Allowance for Loan Losses. Based upon management's  evaluation of the underlying
credit risk of the loan  portfolio  and the level of allowance  for loan losses,
the Company  established  no  provisions  for loan losses during the three month
periods ending September 30, 2002 and 2001.

At both  September  30, 2002 and March 31, 2002,  the  allowance for loan losses
totaled  $425,000 or 0.9% of total loans. The allowance for loan losses to total
non-performing  loans  totaled  379.5% and 376.1%,  respectively.  The Company's
non-performing  loans (non-  accrual  loans and  accruing  loans 90 days or more
overdue) totaled $112,000 and $113,000 at September 30, 2002 and March 31, 2002,

                                        8
<PAGE>


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


respectively, which represented 0.25% and 0.07% of the Company's total loans and
total assets, respectively, at both September 30, 2002 and March 31, 2002.

Other Income.  During the three months ended  September  30, 2002,  other income
increased $26,000 or 136.8%, as compared to the three months ended September 30,
2001. The increase was primarily attributable to increases in the cash surrender
values  of  insurance  policies  held on the  participants  of the  Supplemental
Executive Retirement Plan ("SERP") and the Directors' Retirement Plan ("DRP").

Other  Expenses.  Total other  expenses  increased by $42,000 or 6.9% during the
three months  ended  September  30, 2002,  as compared to the three months ended
September 30, 2001. The increase was  attributable  to an increase of $29,000 in
compensation and employee benefits expense and $19,000 in other expenses, offset
by a decrease of $6,000 in premises and occupancy costs.

Income Tax Expense.  The provision for income tax totaled  $30,000 for the three
months ended  September  30,  2002,  as compared to $74,000 for the three months
ended  September  30, 2001.  The $44,000 or 59.5%  decrease was due to decreased
income.


Results of Operations for the Six Months Ended September 30, 2002 and 2001

Net Income. The Company recorded net income of $213,000 for the six months ended
September  30,  2002,  as compared to net income of $297,000  for the six months
ended  September 30, 2001.  The $84,000 or 28.3%  decrease in net income for the
six months ended September 30, 2002 was the result of a decrease in net interest
income, offset by decreases in provision for income taxes and other expenses and
an increase in other income. Changes in the components of income and expense are
discussed herein.

Net Interest Income. Net interest income decreased $203,000 or 11.7% for the six
months  ended  September  30,  2002,  as compared to the six month  period ended
September  30, 2001.  Although the average  balance of  interest-earning  assets
increased $3.6 million or 2.5%,  the average yield earned  thereon  decreased 81
basis points. The average balance of interest-bearing  liabilities  increased by
$4.0 million or 3.3%, however,  the average rate paid thereon decreased 61 basis
points.

The net interest  rate spread  decreased to 1.42% for the six month period ended
September 30, 2002 from 1.62% for the six month period ended September 30, 2001.
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  interest-bearing
liabilities.

Interest Income.  Interest income decreased  $486,000 or 10.2% to $4,282,000 for
the six month period ended September 30, 2002, as compared to $4,768,000 for the
six month period ended September 30, 2001.

Interest  on loans  receivable  decreased  $218,000  or 12.3% for the six months
ended  September 30, 2002,  as compared to the six month period ended  September
30, 2001.  This decrease was primarily the result of a $4.3 million  decrease in
the average  balance of loans  receivable  and a 29 basis point  decrease in the
average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $292,000 or 15.1% for
the six months ended  September  30,  2002,  as compared to the six months ended
September  30, 2001.  This  increase was primarily the result of a $23.9 million
increase in the average balance of mortgage-backed  securities,  offset by a 120
basis point decrease in the average yield earned thereon.

Interest income on investment securities decreased $365,000 or 45.5% for the six
months ended  September 30, 2002, as compared to the six months ended  September
30, 2001. The decrease in interest income on investment securities was primarily
due to a $9.2 million  decrease in the average  balance of such securities and a
84 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning assets decreased $195,000 or 74.7% for
the six months ended  September  30,  2002,  as compared to the six months ended
September 30, 2001. The decrease was primarily due to a $6.8 million decrease in
the average interest-earning  deposits at other financial institutions and a 180
basis point decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 5.77%
and  6.58%  for the six  month  periods  ended  September  30,  2002  and  2001,
respectively.

Interest Expense.  Interest expense decreased $283,000 or 9.3% to $2,745,000 for
the six months ended  September 30, 2002, as compared to $3,028,000  for the six
months   ended   September   30,   2001.   Although   the  average   balance  of
interest-bearing  liabilities  increased  $4.0  million,  the average  rate paid
thereon decreased 61 basis points.

                                        9

<PAGE>

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


Interest expense on deposits  (including escrows) totaled $1,411,000 for the six
months ended  September 30, 2002,  as compared to $1,694,000  for the six months
ended  September 30, 2001. The $283,000 or 16.7% decrease was primarily due to a
96 basis point  decrease in the average rate paid on deposits,  offset by a $4.0
million increase in the average balance of deposits and escrows.

Interest on FHLB advances  totaled  $1,334,000  for both six month periods ended
September 30, 2002 and 2001.

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  provisions  for loan  losses  during the six month
periods ending September 30, 2002 and 2001.

Other  Income.  During the six months ended  September  30,  2002,  other income
increased  $35,000 or 57.4%,  as compared to the six months ended  September 30,
2001. The increase was primarily attributable to increases in the cash surrender
values of insurance policies held on the participants of the SERP and DRP.

Other Expenses. Total other expenses decreased by $26,000 or 1.9% during the six
months ended  September 30, 2002, as compared to the six months ended  September
30, 2001.  The decrease  was  attributable  primarily to decreases of $31,000 in
compensation and employee  benefits expense and $5,000 in premises and occupancy
costs,  offset by an  increase  of $10,000 in other  expenses.  The  decrease in
compensation  and employee  benefits expense was due to decreases of $102,000 in
ESOP expense due to the  completion of the ESOP awards on December 31, 2001, and
$44,000  in RSP  expense  due to the  completion  of the RSP awards on April 16,
2002, partially offset by increases of $114,000 in the Company's defined benefit
plan,  SERP and DRP costs due to a SERP  amendment  made in September  2001, and
$1,000 in compensation and employee benefits expense.

Income Tax Expense.  The provision  for income tax totaled  $101,000 for the six
months  ended  September  30,  2002,  as compared to $159,000 for the six months
ended  September  30, 2001.  The $58,000 or 36.5%  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 September 30, 2002, the Bank was in compliance with its
three regulatory capital requirements as follows:


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

Tangible capital......................   $24,098           15.38%
Tangible capital requirement..........     2,351            1.50
                                         -------           -----
Excess over requirement...............   $21,747           13.88%
                                         =======           =====

Core capital..........................   $24,098           15.38%
Core capital requirement..............     4,702            3.00
                                         -------           -----
Excess over requirement...............   $19,396           12.38%
                                         =======           =====

Risk based capital....................   $24,523           57.82%
Risk based capital requirement........     3,393            8.00
                                         -------           -----
Excess over requirement...............   $21,130           49.82%
                                         =======           =====

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

                                       10

<PAGE>

                             CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of a date within 90 days of the filing date of this
Quarterly Report on Form 10-QSB,  the Registrant's  principal  executive officer
and principal financial officer have concluded that the Registrant's  disclosure
controls and procedures (as defined in Rules  13a-14(c) and 15d-14(c)  under the
Securities  Exchange Act of 1934 (the  "Exchange  Act")) are effective to ensure
that  information  required to be  disclosed  by the Company in reports  that it
files or submits under the Exchange Act is recorded,  processed,  summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

Changes in Internal Controls

There were no significant  changes in the Registrant's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their  evaluation,  including  any  corrective  actions  with  regard to
significant deficiencies and material weaknesses.

                                       11

<PAGE>

                           PART II - OTHER INFORMATION


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

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

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

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

               Not applicable.

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

               Not applicable.

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

               The Annual  Meeting of  Stockholders  of the  Company was held on
               July 18, 2002 and the following matters were voted on:

               1.  Election of directors for 3-year term expiring in 2005:

                                                For        Withheld
                                                ---        --------
                       Walter G. Kelly        2,923,651     32,434

                       Renaloy J. Senules     2,951,420      4,665



               2.  Ratification of appointment of Stokes & Hinds, LLC as auditor
                   for the fiscal year ending March 31, 2003:

                                                For        Withheld      Against
                                                ---        --------      -------
                                              2,927,210     27,958        917

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

               Not applicable.

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

               a)   Exhibits:

                      1.  Certification pursuant to 18 U.S.C.ss.1350, as adopted
                          pursuant to Section 906 of the Sarbanes-Oxley  Act  of
                          2002

               b)  Reports on Form 8-K:

                      None

                                       12

<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: October 28, 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, Treasurer
(Principal Executive Officer)           and Secretary
                                        (Principal Financial and Accounting Officer)

Date: October 28, 2002                  Date: October 28, 2002

</TABLE>

<PAGE>

                            SECTION 302 CERTIFICATION


I, Walter G. Kelly,  President and Chief  Executive  Officer of Skibo  Financial
Corp., certify that:

1.   I have reviewed  this  quarterly  report on Form 10-QSB of Skibo  Financial
     Corp.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date:    October 28, 2002           /s/Walter G. Kelly
                                    -------------------------------
                                    Walter G. Kelly
                                    President and Chief Executive Officer




<PAGE>


                           SECTION 302 CERTIFICATION


I, Carol A.  Gilbert,  Chief  Financial  and  Operating  Officer,  Treasurer and
Secretary of Skibo Financial Corp., certify that:

1.   I have reviewed  this  quarterly  report on Form 10-QSB of Skibo  Financial
     Corp.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     (a)  designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     (b)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     (a)  all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date:    October 28, 2002       /s/Carol A. Gilbert
                                ------------------------------------------------
                                Carol A. Gilbert
                                Chief Financial and Operating Officer, Treasurer
                                and Secretary