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, 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 October 19, 2001


$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, 2001 (unaudited) and March 31, 2001................1

              Consolidated Statements of Income for the three and
                   six months ended September 30, 2001 and 2000 (unaudited)....2

              Consolidated Statement of Stockholders' Equity for the
              six months ended September 30, 2001 (unaudited)..................3

              Consolidated Statements of Cash Flows for the six
              months ended September 30, 2001 and 2000 (unaudited).............4

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


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


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


Item 1. Legal Proceedings.....................................................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 SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                       September 30,      March  31,
                                                                                            2001            2001
                                                                                     -----------------   -------------

                    ASSETS                                                            (Unaudited)
                    ------
<S>                                                                               <C>                 <C>
Cash and amounts due from depository institutions                                    $       823         $    1,026
Interest-bearing deposits with other institutions                                         11,026              8,186
Investment securities:
     Held-to-maturity (market value $22,675 and $25,972)                                  22,468             26,084
Mortgage-backed securities:
     Held-to-maturity (market value $61,506 and $56,551)                                  60,225             55,907
Loans receivable, net                                                                     49,825             49,798
Accrued interest receivable:
     Investment securities                                                                   463                496
     Mortgage-backed securities                                                              433                411
     Loans receivable                                                                        441                452
Federal Home Loan Bank stock, at cost                                                      2,615              2,615
Premises and equipment, net                                                                  553                577
Prepaid expenses and other assets                                                          4,680              4,360
                                                                                       ---------          ---------
        Total Assets                                                                   $ 153,552          $ 149,912
                                                                                       =========          =========

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

Liabilities:
     Deposits                                                                          $  76,403          $  73,399
     Federal Home Loan Bank advances                                                      48,000             48,000
     Advances from borrowers for taxes and insurance                                          13                107
     Accrued expenses and other liabilities                                                4,222              3,304
                                                                                       ---------          ---------
        Total Liabilities                                                                128,638            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                                                            9,769              9,745
     Treasury stock, at cost (320,423 shares at September 30, 2001
         and 304,694 shares at March 31, 2001)(1)                                         (2,227)            (2,087)
     Unearned Employee Stock Ownership Plan (ESOP) shares                                    (13)               (91)
     Unearned Restricted Stock Plan (RSP) shares                                             (52)              (100)
     Retained earnings, substantially restricted                                          17,092             17,290
                                                                                       ---------          ---------
        Total Stockholders' Equity                                                        24,914             25,102
                                                                                       ---------          ---------

        Total Liabilities and Stockholders' Equity                                     $ 153,552          $ 149,912
                                                                                       =========          =========
</TABLE>



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


See accompanying notes to consolidated financial statements.

                                        1
<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                        Consolidated Statements of Income

         For the Three and Six Months Ended September 30, 2001 and 2000

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                         Three Months Ended               Six Months Ended
                                                                            September 30,                   September 30,
                                                                        2001             2000            2001            2000
                                                                        ----             ----            ----            ----
                                                                            (unaudited)                      (unaudited)
<S>                                                               <C>              <C>             <C>              <C>
Interest income:
     Loans receivable                                                 $   871          $ 1,021         $ 1,770          $ 2,046
     Mortgage-backed securities                                           969            1,002           1,934            2,009
     Investment securities                                                380              468             803              931
     Other                                                                123               65             261              131
                                                                      -------          -------         -------          -------
            Total interest income                                       2,343            2,556           4,768            5,117

Interest expense:
     Deposits                                                             846              832           1,694            1,647
     Federal Home Loan Bank advances                                      671              672           1,334            1,344
                                                                      -------          -------         -------          -------
            Total interest expense                                      1,517            1,504           3,028            2,991
                                                                      -------          -------         -------          -------

            Net interest income                                           826            1,052           1,740            2,126

Provision for loan losses                                                  --               --              --               --
                                                                      -------          -------         -------          -------
            Net interest income after
              provision for loan losses                                   826            1,052           1,740            2,126

Other income:
     Fees and service charges                                              10                9              20               17
     Other                                                                  9                9              41               27
                                                                      -------          -------         -------          -------
            Total other income                                             19               18              61               44

Other expenses:
     Compensation and employee benefits                                   505              448           1,101              908
     Premises and occupancy costs                                          49               54              97              107
     Federal insurance premiums                                             3                4               7                8
     Other operating expenses                                              55               72             140              160
                                                                      -------          -------         -------          -------
            Total other expenses                                          612              578           1,345            1,183
                                                                      -------          -------         -------          -------

               Income before income taxes                                 233              492             456              987

Provision for income taxes                                                 74              155             159              367
                                                                      -------          -------         -------          -------
            Net income                                                    159              337             297              620

Other comprehensive income:
       Unrealized gain on securities available-for-
          sale, net of tax                                                 --               --              --               --
                                                                      -------          -------         -------          -------
               Total comprehensive income                             $   159          $   337         $   297          $   620
                                                                      =======          =======         =======          =======

Basic earnings per share                                              $   .05          $   .11         $   .09          $   .19
Diluted earnings per share                                            $   .05          $   .11         $   .09          $   .19

Weighted average shares outstanding - Basic                         3,133,269        3,147,845       3,132,137        3,189,127
Weighted average shares outstanding - Diluted                       3,189,077        3,151,723       3,172,212        3,191,077

</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, 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
  ($.24 per share regular,
   $.20 per share special)                --             --          --        --          --       (495)    (495)

Excess of fair value above cost of
 ESOP shares released or
  committed to be released                --             24          --        --          --         --       24

Amortization of ESOP liability            --             --          --        78          --         --       78

Amortization of RSP liability             --             --          --        --          48         --       48

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

Net income                                --             --          --        --          --        297      297
                                      ---------------------------------------------------------------------------

Balance at September 30, 2001           $345         $9,769     $(2,227)     $(13)       $(52)   $17,092  $24,914
                                      ===========================================================================

</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, 2001 and 2000

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                               2001        2000
                                                                             --------    --------
                                                                                 (Unaudited)
<S>                                                                       <C>         <C>
Operating activities:
     Net income                                                              $    297    $    620
     Adjustments to reconcile net income to net cash
        (used in) provided by operating activities:
           Depreciation                                                            33          37
           Compensation expense-ESOP and RSP                                      150         142
           Net (accretion) amortization of premiums and discounts                 (77)         49
           Decrease (increase) in accrued interest receivable                      22         (67)
           Increase in prepaid expenses                                          (320)       (430)
           Increase in accrued interest payable                                   298         289
           Increase in accrued income taxes                                       102          13
           Other, net                                                             517          11
                                                                             --------    --------
             Net cash provided by operating activities                          1,022         664
                                                                             --------    --------

Investing activities:
     Purchases of premises and equipment                                           (9)         (2)
     Purchases of investment securities held-to maturity                       (1,170)     (2,487)
     Purchases of mortgage-backed securities held-to-maturity                 (15,283)     (3,163)
     Proceeds from maturities/calls and principal repayments of:
        Investment securities held-to-maturity                                  4,782         695
        Mortgage-backed securities held-to-maturity                            11,010       5,190
     Loans purchased                                                           (6,903)     (1,380)
     Net principal repayments on loans                                          6,913       2,941
                                                                             --------    --------
             Net cash provided by (used in) investing activities                 (660)      1,794
                                                                             --------    --------

Financing activities:
     Net increase (decrease) in deposits                                        3,004      (2,562)
     Proceeds from Federal Home Loan Bank advances                                 --      14,000
     Repayment of Federal Home Loan Bank advances                                  --     (13,500)
     Net decrease in mortgage escrow                                              (94)        (85)
     Treasury stock purchased                                                    (140)       (823)
     Cash dividends paid                                                         (495)       (269)
                                                                             --------    --------
                Net cash provided by (used in) financing activities             2,275      (3,239)
                                                                             --------    --------

Net increase (decrease) in cash and cash equivalents                            2,637        (781)
Cash and cash equivalents, beginning of period                                  9,212       1,726
                                                                             --------    --------
Cash and cash equivalents, end of period                                     $ 11,849    $    945
                                                                             ========    ========

Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
        Interest                                                             $  2,729    $  2,702
                                                                             ========    ========

        Income taxes                                                         $     88    $    450
                                                                             ========    ========
</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, 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 September  13, 2001,  the Board of Directors of the Company  declared a $0.12
per share cash  dividend on the  Company's  outstanding  shares of common stock,
payable to  stockholders of record as of September 28, 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 October 12, 2001. Under the interim final rule of the Office
of Thrift  Supervision  (the  "OTS")  effective  July 12,  2000,  any  waiver of
dividends by the M.H.C. will no longer result in the OTS requiring an adjustment
to the ratio  pursuant to which shares of Company common stock are exchanged for
shares of a stock holding  company should the M.H.C.  convert from the mutual to
stock  form of  organization.  Such an  adjustment  would have had the effect of
diluting the minority stockholders of the Company.

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

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

For the three months ended  September  30, 2001 and 2000,  the  Company's  total
comprehensive income was $159,000 and $337,000,  respectively,  and $297,000 and
$620,000,  respectively,  for the six months ended  September 30, 2001 and 2000.
Total  comprehensive  income is comprised of net income and other  comprehensive
income.  For both three and six month periods ended September 30, 2001 and 2000,
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,
                                    2001            2000            2001               2000
                                -------------    -------------    -------------     -------------
<S>                               <C>              <C>              <C>               <C>
Basic EPS computation:
 Numerator-Net Income               $ 159,000        $ 337,000        $ 297,000         $ 620,000
 Denominator-Wt Avg common
 shares outstanding                 3,133,269        3,147,845        3,132,137         3,189,127
Basic EPS                           $     .05    $         .11        $     .09         $     .19
                                          ===               ==              ===               ===

Diluted EPS computation:
 Numerator-Net Income               $ 159,000        $ 337,000        $ 297,000         $ 620,000
 Denominator-Wt Avg
   common shares outstanding        3,133,269        3,147,845        3,132,137         3,189,127
 Dilutive Stock Options                53,095            3,878           38,718             1,950
 Dilutive Unvested RSP                  2,713               --            1,357                --
                                    ---------        ---------        ---------         ---------
 Weighted avg common shares
  and common stock
    equivalents                     3,189,077        3,151,723        3,172,212         3,191,077
Diluted EPS                         $     .05        $     .11        $     .09         $     .19
                                          ===              ===              ===               ===
</TABLE>

For both the three and six months ended  September  30, 2000,  15,366 RSP shares
were  excluded  from the  diluted  EPS  computation  due to their  anti-dilutive
effect. Shares outstanding for the three and six months ended September 30, 2001
and 2000 do not include ESOP shares that were  unallocated  in  accordance  with
Statement of Position ("SOP") 93-6,  "Employers'  Accounting for Employees Stock
Ownership  Plans".  Unallocated  ESOP  shares  amounted  to 2,026 and  26,046 at
September 30, 2001 and 2000, respectively.

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

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

                                        6
<PAGE>

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


General

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

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

Changes in Financial Condition

The Company's total assets of $153,552,000 at September 30, 2001, are reflective
of an increase of $3,640,000 or 2.4%, as compared to  $149,912,000  at March 31,
2001.  The increase in total  assets was due to  increases  in interest  bearing
deposits with other financial  institutions,  loans receivable,  mortgage-backed
securities,  and prepaid expenses, offset by decreases in investment securities,
cash and amounts due from depository  institutions,  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 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  $11,849,000,  an
increase of  $2,637,000  or 28.6% as compared to  $9,212,000  at March 31, 2001.
This increase was due to increased  interest-bearing  deposits maintained at the
Federal  Home Loan Bank and  non-interest  bearing  deposits  maintained  at the
Federal Reserve Bank of Cleveland, offset by decreased cash on hand.

Investment  Securities.  Investment  securities totaled $22,468,000 at September
30, 2001, a decrease of $3,616,000 or 13.9%, as compared to $26,084,000 at March
31, 2001. The decrease was primarily due to proceeds from maturities,  calls and
payments  totaling  $4.8  million,  offset by  purchases of $1.2 million of U.S.
Agency securities.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $60,225,000 at
September  30,  2001,  an  increase  of  $4,318,000  or  7.7%,  as  compared  to
$55,907,000  at March 31, 2001.  The increase was  primarily due to purchases of
$15.3 million,  offset by principal  repayments  and  maturities  totaling $11.0
million.

Loans  Receivable,  net.  Net loans  receivable  at  September  30, 2001 totaled
$49,825,000, an increase of $27,000 or 0.1%, as compared to $49,798,000 at March
31,  2001.  The  increase  was  primarily  due to  originations  of $304,000 and
purchases of $6.9 million, offset by principal repayments totaling $7.2 million.
The Company originated  $97,000 one -to four-family  mortgage loans and $207,000
consumer  loans  within its normal  lending  area.  The Company  purchased  $3.5
million  conventional  one- to four-family  mortgage loans and $684,000  insured
Federal Housing Administration  ("FHA") and Veterans  Administration ("VA") one-
to  four-family  mortgage loans within its normal lending area. The Company also
purchased $238,000  Government  National Mortgage  Association  ("GNMA") project
loans,  $1.6 million United States  Department of Agriculture  ("USDA") mortgage
loans,  and $866,000  Small  Business  Administration  ("SBA")  loans  primarily
outside its normal lending area.

Deposits. Total deposits, after interest credited,  increased $3,004,000 or 4.1%
to  $76,403,000  at September 30, 2001, as compared to  $73,399,000 at March 31,
2001. The increase was due to increases in  certificates of deposit and passbook
accounts, offset by decreases in NOW and Money Market accounts.

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

Stockholders' Equity.  Stockholders' equity totaled $24,914,000 at September 30,
2001, as compared to  $25,102,000 at March 31, 2001. The decrease of $188,000 or
0.7% 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 two $.12  regular  cash
dividends and one $.20 special cash dividend,  partially  offset by earnings for
the six months ended September 30, 2001.

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

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

Net Income.  The Company  recorded  net income of $159,000  for the three months
ended  September  30, 2001,  as compared to net income of $337,000 for the three
months ended  September 30, 2000.  The $178,000 or 52.8%  decrease in net income
for the three  months ended  September  30, 2001 was  primarily  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.  Changes  in the
components of income and expense are discussed herein.

Net Interest  Income.  Net interest income  decreased  $226,000 or 21.5% for the
three months  ended  September  30, 2001,  as compared to the three month period
ended  September  30,  2000.  Although the average  balance of  interest-earning
assets  increased  $2.1  million  or 1.5%,  the  average  yield  earned  thereon
decreased 69 basis points. The average balance of  interest-bearing  liabilities
increased  by $1.5  million or 1.3%,  however,  the  average  rate paid  thereon
decreased 2 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,  declined to 1.50% for the three month period ended  September  30,
2001 from  2.17% for the three  month  period  ended  September  30,  2000.  The
decrease in the net interest  rate spread was  primarily the result of decreased
yields on the average  balances of interest  earning assets and increased  rates
paid on the average balance FHLB advances,  partially  offset by decreased rates
paid on the average balance of savings deposits.

Interest Income.  Interest income  decreased  $213,000 or 8.3% to $2,343,000 for
the three month period ended  September 30, 2001, as compared to $2,556,000  for
the three month period ended September 30, 2000.

Interest on loans  receivable  decreased  $150,000 or 14.7% for the three months
ended  September 30, 2001, as compared to the three month period ended September
30, 2000. This decrease was the result of a $4.7 million decrease in the average
balance of loans  receivable  and a 50 basis point decrease in the average yield
earned thereon.

Interest income on mortgage-backed  securities decreased $33,000 or 3.3% for the
three months  ended  September  30, 2001,  as compared to the three months ended
September 30, 2000. This decrease was the result of a 44 basis point decrease in
the average yield earned on mortgage-backed securities, offset by a $1.9 million
increase in the average balance of mortgage-backed securities.

Interest  income on  investment  securities  decreased  $88,000 or 18.8% for the
three months  ended  September  30, 2001,  as compared to the three months ended
September 30, 2000. The decrease in interest income on investment securities was
primarily  due  to a $3.9  million  decrease  in the  average  balance  of  such
securities and a 36 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning  assets increased $58,000 or 89.2% for
the three months ended September 30, 2001, as compared to the three months ended
September 30, 2000. The increase was primarily due to a $8.9 million increase in
the  average  balance of other  interest-earning  assets,  offset by a 349 basis
point decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 6.43%
and  7.12%  for the three  month  periods  ended  September  30,  2001 and 2000,
respectively.

Interest Expense. Interest expense totaled $1,517,000 for the three months ended
September  30,  2001,  as  compared to  $1,504,000  for the three  months  ended
September  30, 2000.  The $13,000 or 0.9%  increase was  primarily due to a $1.5
million increase in the average balance of interest-bearing liabilities,  offset
by a 2 basis point decrease in the average rate paid thereon.

Interest expense on deposits  (including escrows) totaled $846,000 for the three
months  ended  September  30, 2001 as compared to $832,000  for the three months
ended  September  30, 2000.  The $14,000 or 1.7% increase was primarily due to a
$2.5 million  increase in the average balance of deposits,  offset by an 8 basis
point decrease in the average rate paid thereon.

Interest on FHLB  advances  decreased  $1,000 or 0.1% for the three months ended
September  30, 2001,  as compared to the three months ended  September 30, 2000.
The decrease was primarily due to a $1.0 million decrease in the average balance
of FHLB advances,  offset by a 10 basis point increase in the rate paid thereon.
The  Company  uses FHLB  advances  as a funding  source and has in the past used
borrowings to supplement  deposits,  which are the Company's  primary  source of
funds.

                                        8
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF 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 ending September 30, 2001 and 2000.

At September 30, 2001,  the allowance for loan losses  totaled  $425,000 or .85%
and  801.9% of total  loans and total  non-performing  loans,  respectively,  as
compared to $425,000 or .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  $53,000 and $30,000 at September 30, 2001 and March 31,
2001  respectively,  which  represented  0.11% and 0.06% of the Company's  total
loans, respectively. The Company's ratio of non-performing loans to total assets
was 0.03% and 0.02% at September 30, 2001 and March 31, 2001, respectively.

Other Income.  During the three months ended  September  30, 2001,  other income
increased  $1,000 or 5.6%,  as compared to the three months ended  September 30,
2000.

Other  Expenses.  Total other  expenses  increased by $34,000 or 5.9% during the
three months  ended  September  30, 2001,  as compared to the three months ended
September 30, 2000. The increase was  attributable  to an increase of $57,000 in
compensation and employee  benefits  expense,  offset by decreases of $17,000 in
other expenses, $1,000 in federal insurance premiums, and $5,000 in premises and
occupancy costs.

Income Tax Expense.  The provision for income tax totaled  $74,000 for the three
months ended  September  30, 2001,  as compared to $155,000 for the three months
ended  September  30, 2000.  The $81,000 or 52.3%  decrease was due to decreased
income.


Results of Operations for the Six Months Ended September 30, 2001 and 2000

Net Income. The Company recorded net income of $297,000 for the six months ended
September  30,  2001,  as compared to net income of $620,000  for the six months
ended  September 30, 2000.  The $323,000 or 52.1% decrease in net income for the
six months ended  September  30, 2001 was  primarily the result of a decrease in
net interest income and an increase in other  expenses,  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 $386,000 or 18.2% for the six
months  ended  September  30,  2001,  as compared to the six month  period ended
September  30, 2000.  Although the average  balance of  interest-earning  assets
increased  $667,000 or 0.5%, the average yield earned thereon decreased 52 basis
points.  The  average  balance  of  interest-bearing  liabilities  increased  by
$329,000 or 0.3%, and the average rate paid thereon increased 5 basis points.

The net  interest  rate spread  declined to 1.62% for the six month period ended
September 30, 2001 from 2.19% for the six month period ended September 30, 2000.
The  decrease  in the net  interest  rate  spread  was  primarily  the result of
decreased  yields on the average  balances of all  interest  earning  assets and
increased rates paid on interest-bearing liabilities.

Interest Income.  Interest income  decreased  $349,000 or 6.8% to $4,768,000 for
the six month period ended September 30, 2001, as compared to $5,117,000 for the
six month period ended September 30, 2000.

Interest  on loans  receivable  decreased  $276,000  or 13.5% for the six months
ended  September 30, 2001,  as compared to the six month period ended  September
30, 2000. This decrease was the result of a $5.4 million decrease in the average
balance of loans  receivable  and a 31 basis point decrease in the average yield
earned thereon.

Interest income on mortgage-backed  securities decreased $75,000 or 3.7% for the
six months  ended  September  30,  2001,  as  compared  to the six months  ended
September 30, 2000. This decrease was the result of a 32 basis point decrease in
the average  yield earned on  mortgage-backed  securities,  offset by a $555,000
increase in the average balance of mortgage-backed securities.

Interest income on investment securities decreased $128,000 or 13.7% for the six
months ended  September 30, 2001, as compared to the six months ended  September
30, 2000. The decrease in interest income on investment  securities was due to a
$2.6 million  decrease in the average  balance of such securities and a 33 basis
point decrease in the average yield earned thereon.

Interest income on other interest-earning assets increased $130,000 or 99.2% for
the six months ended  September  30,  2001,  as compared to the six months ended
September 30, 2000. The increase was primarily due to a $8.0 million increase in
the average interest-earning deposits at other financial institutions, partially
offset by a 260 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 6.58%
and  7.10%  for the six  month  periods  ended  September  30,  2001  and  2000,
respectively.

Interest Expense.  Interest expense totaled  $3,028,000 for the six months ended
September 30, 2001, as compared to $2,991,000 for the six months ended September
30, 2000. The $37,000 or 1.2% increase was primarily due to a $329,000  increase
in the  average  balance of  interest-bearing  liabilities  and a 5 basis  point
increase in the average rate paid thereon.

Interest expense on deposits  (including escrows) totaled $1,694,000 for the six
months ended  September 30, 2001,  as compared to $1,647,000  for the six months
ended  September  30, 2000.  The $47,000 or 2.9% increase was primarily due to a
$1.2  million  increase in the average  balance of deposits  and a 5 basis point
increase in the average rate paid thereon.

Interest on FHLB  advances  decreased  $10,000 or 0.7% for the six months  ended
September 30, 2001, as compared to the six months ended  September 30, 2000. The
decrease  was  primarily  due to a $917,000  decrease in the average  balance of
advances, offset by a 6 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 six month
periods ending September 30, 2001 and 2000.

Other  Income.  During the six months ended  September  30,  2001,  other income
increased  $17,000 or 38.6%,  as compared to the six months ended  September 30,
2000.

Other Expenses.  Total other expenses  increased by $162,000 or 13.7% during the
six months  ended  September  30,  2001,  as  compared  to the six months  ended
September 30, 2000. The increase was  attributable to an increase of $193,000 in
compensation and employee  benefits  expense,  offset by decreases of $20,000 in
other expenses,  $1,000 in federal insurance  premiums,  and $10,000 in premises
and occupancy costs. The increase in compensation and employee  benefits expense
was  due to  increases  of  $122,000  in the  Company's  defined  benefit  plan,
Supplemental  Employee  Pension Plan  ("SERP") and  Director's  Retirement  Plan
("DRP")  costs,  $63,000 in  compensation  and employee  benefits  expense,  and
$12,000 in ESOP expense, offset by a decrease of $4,000 in RSP expense.

Income Tax Expense.  The provision  for income tax totaled  $159,000 for the six
months  ended  September  30,  2001,  as compared to $367,000 for the six months
ended  September 30, 2000.  The $208,000 or 56.7%  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, 2001, the Bank was in compliance with its
three regulatory capital requirements as follows:


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

Tangible capital...................    $24,221           15.79%
Tangible capital requirement.......      2,301            1.50
                                       -------           -----
Excess over requirement............    $21,920           14.29%
                                       =======           =====

Core capital.......................    $24,221           15.79%
Core capital requirement...........      4,602            3.00
                                       -------           -----
Excess over requirement............    $19,619           12.79%
                                       =======           =====

Risk based capital.................    $24,646           55.28%
Risk based capital requirement.....      3,567            8.00
                                       -------           -----
Excess over requirement............    $21,079           47.28%
                                       =======           =====


                                       10
<PAGE>

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.

                           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.
               ----------------------------------------------------

               The Annual  Meeting of  Stockholders  of the  Company was held on
               July 19, 2001 and the following matters were voted on:

               1.  Election of directors for 3-year term expiring in 2004:

                                                     For          Withheld
                                                   ---------      --------
                    Layne W. Craig                 2,924,852      42,472

                    John T. Mendenhall, Jr.        2,933,300      34,024



               2.  Ratification of appointment of Stokes & Hinds, LLC as auditor
                   for the fiscal year ending March 31, 2002:

                                                     For       Against   Abstain
                                                   ---------   -------   -------
                                                   2,936,536    30,721     67

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

               Not applicable.

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

               a)   Not applicable

               b)   Not applicable

                                       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 19, 2001
                                       By: /s/ Walter G. Kelly
                                           -------------------------------------
                                           Walter G. Kelly
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

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

<TABLE>
<CAPTION>

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

Date: October 19, 2001                     Date: October 19, 2001

</TABLE>