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, 2000
                               ------------------

[ ]  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 20, 2000


$0.10 Par Value Common Stock                                    3,176,076
----------------------------                              ---------------------
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, 2000 (unaudited) and March 31, 2000             1

              Consolidated Statements of Income for the three and six
              months ended September 30, 2000 and 1999 (unaudited)          2

              Consolidated Statement of Stockholders' Equity for the
              six months ended September 30, 2000 (unaudited)               3

              Consolidated Statements of Cash Flows for the six months
              ended September 30, 2000 and 1999 (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                                               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,
                                                                                         2000              2000
                                                                                      -------------      ---------

                     ASSETS                                                           (Unaudited)
                     ------

<S>                                                                                <C>               <C>
 Cash and amounts due from depository institutions                                    $     519         $     446
 Interest-bearing deposits with other institutions                                          426             1,280
 Investment securities:
          Held-to-maturity (market value $26,965 and $24,928)                            28,491            26,696
 Mortgage-backed securities:
          Held-to-maturity (market value $56,454 and $57,840)                            57,118            59,181
 Loans receivable, net                                                                   54,929            56,504
 Accrued interest receivable:
          Investment securities                                                             522               427
          Mortgage-backed securities                                                        413               410
          Loans receivable                                                                  498               486
          FHLB stock                                                                         --                43
 Federal Home Loan Bank stock, at cost                                                    2,615             2,615
 Premises and equipment, net                                                                591               626
 Prepaid expenses and other assets                                                        4,348             3,918
                                                                                        -------           -------
                   Total Assets                                                       $ 150,470         $ 152,632
                                                                                        =======           =======

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

 Liabilities:
          Deposits                                                                    $  73,021         $  75,583
          Federal Home Loan Bank advances                                                49,500            49,000
          Advances from borrowers for taxes and insurance                                    43               128
          Accrued expenses and other liabilities                                          3,093             2,778
                                                                                        -------           -------
                   Total Liabilities                                                    125,657           127,489


 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                                                               9,737             9,740
 Treasury stock, at cost (284,381 shares at September 30, 2000
     and 163,111 shares at March 31, 2000)(1)                                            (1,942)           (1,119)
 Unearned Employee Stock Ownership Plan (ESOP) shares                                      (174)             (267)
 Unearned Restricted Stock Plan (RSP) shares                                               (147)             (199)
 Retained earnings, substantially restricted                                             16,994            16,643
                                                                                        -------           -------
                   Total Stockholders' Equity                                            24,813            25,143
                                                                                        -------           -------

                   Total Liabilities and Stockholders' Equity                         $ 150,470         $ 152,632
                                                                                        =======           =======

</TABLE>


(1)  Included are shares held by the Bank's RSP totaling 10,483 at September 30,
     2000 and 7,863 at March 31, 2000, 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, 2000 and 1999

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       Three Months Ended                Six Months Ended
                                                                           September 30,                    September 30,
                                                                       2000              1999         2000            1999
                                                                       ----              ----         ----            ----
                                                                             (unaudited)                   (unaudited)

 <S>                                                               <C>            <C>            <C>             <C>
Interest income:
          Loans receivable                                            $ 1,021        $ 1,081        $ 2,046         $ 2,230
          Mortgage-backed securities                                    1,002            899          2,009           1,734
          Investment securities                                           468            431            931             835
          Other                                                            65            105            131             203
                                                                        -----          -----          -----           -----
                       Total interest income                            2,556          2,516          5,117           5,002

 Interest expense:
          Deposits                                                        832            817          1,647           1,633
          Federal Home Loan Bank advances                                 672            636          1,344           1,262
          Bonds payable                                                    --             32             --              63
                                                                        -----          -----          -----           -----
                       Total interest expense                           1,504          1,485          2,991           2,958
                                                                        -----          -----          -----           -----

                       Net interest income                              1,052          1,031          2,126           2,044

 Provision for loan losses                                                 --              1             --               2
                                                                        -----          -----          -----           -----
                       Net interest income after
                        provision for loan losses                       1,052          1,030          2,126           2,042
 Other income:
          Fees and service charges                                          9             11             17              30
          Other                                                             9             10             27              19
                                                                        -----          -----          -----           -----
                       Total other income                                  18             21             44              49

 Other expenses:
          Compensation and employee benefits                              448            460            908             950
          Premises and occupancy costs                                     54             56            107             110
          Federal insurance premiums                                        4             11              8              22
          Other operating expenses                                         72             97            160             181
                                                                        -----          -----          -----           -----
                       Total other expenses                               578            624          1,183           1,263
                                                                        -----          -----          -----           -----

                       Income before income taxes                         492            427            987             828

 Provision for income taxes                                               155            141            367             315
                                                                          ---            ---            ---             ---
                       Net income                                       $ 337          $ 286          $ 620           $ 513

 Other comprehensive income:
        Unrealized gain on securities available-for-
           sale, net of tax                                                --             --             --              --
                                                                          ---            ---            ---             ---
                       Total comprehensive income                       $ 337          $ 286          $ 620           $ 513
                                                                          ===            ===            ===             ===


 Basic earnings per share                                               $ .11          $ .08           $.19            $.15
 Diluted earnings per share                                             $ .11          $ .08           $.19            $.15

 Weighted average shares outstanding - Basic                        3,147,845      3,354,208      3,189,127       3,351,462
 Weighted average shares outstanding - Diluted                      3,151,723      3,354,208      3,191,077       3,351,462

</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, 2000 (unaudited)

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                     Additional                  Unearned         Unearned
                                         Common        Paid-in     Treasury        ESOP             RSP       Retained
                                         Stock         Capital      Stock         Shares           Shares     Earnings       Total
                                      ----------------------------------------------------------------------------------------------

<S>                                   <C>          <C>         <C>             <C>              <C>        <C>           <C>
Balance at March 31, 2000                  $345        $9,740     $(1,119)        $(267)           $(199)     $16,643       $25,143

Cash dividends declared net
  ($.15 per share regular,
   $.075 per share special)                  --            --          --            --               --         (269)         (269)

Excess of fair value above cost of
 ESOP shares released or
  committed to be released                   --            (3)         --            --               --           --            (3)


Amortization of ESOP liability               --            --          --            93               --           --            93

Amortization of RSP liability                --            --          --            --               52           --            52

Treasury stock purchased,
  at cost (121,270 shares)                   --            --        (823)           --               --           --          (823)

Net income                                   --            --          --            --               --          620           620
                                      ----------------------------------------------------------------------------------------------


Balance at September 30, 2000              $345        $9,737     $(1,942)        $(174)           $(147)     $16,994       $24,813
                                      ==============================================================================================
</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, 2000 and 1999
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                            2000             1999
                                                                                                            ----             ----
                                                                                                                  (unaudited)
<S>                                                                                                  <C>                <C>
            Operating activities:
                     Net income                                                                          $   620           $   513
                     Adjustments to reconcile net income to net cash
                              (used in) provided by operating activities:
                                       Provision for loan losses                                              --                 2
                                       Depreciation                                                           37                40
                                       Compensation expense-ESOP and RSP                                     142               183
                                       Net amortization of premiums and discounts                             49               143
                                       Decrease (increase) in accrued interest receivable                    (67)              136
                                       Increase in prepaid expenses                                         (430)             (329)
                                       Increase in accrued interest payable                                  289               268
                                       Increase (decrease) in accrued income taxes                            13              (110)
                                       Other, net                                                             11               (81)
                                                                                                           -----             -----
                                           Net cash provided by operating activities                         664               765
                                                                                                           -----             -----

            Investing activities:
                     Purchases of premises and equipment                                                      (2)               (9)
                     Purchases of investment securities held-to maturity                                  (2,487)           (4,332)
                     Purchases of mortgage-backed securities held-to-maturity                             (3,163)          (13,598)
                     Proceeds from maturities/calls and principal repayments of:
                              Investment securities held-to-maturity                                         695             3,234
                              Mortgage-backed securities held-to-maturity                                  5,190             8,533
                     Loans purchased                                                                      (1,380)           (2,662)
                     Net principal repayments on loans                                                     2,941             7,830
                     Increase in Federal Home Loan Bank stock                                                 --               (55)
                                                                                                           -----            ------
                                           Net cash provided by (used in) investing activities             1,794            (1,059)
                                                                                                           -----            ------

            Financing activities:
                     Net decrease in deposits                                                             (2,562)             (559)
                     Proceeds from Federal Home Loan Bank advances                                        14,000             1,100
                     Repayment of Federal Home Loan Bank advances                                        (13,500)             (100)
                     Principal repayment of bonds payable                                                     --            (1,299)
                     Net decrease in mortgage escrow                                                         (85)              (90)
                     Treasury stock purchased                                                               (823)              (17)
                     Cash dividends paid                                                                    (269)             (214)
                                                                                                           -----            ------
                                           Net cash used in financing activities                          (3,239)           (1,179)
                                                                                                           -----             -----

            Net decrease in cash and cash equivalents                                                       (781)           (1,473)
            Cash and cash equivalents, beginning of period                                                 1,726             2,499
                                                                                                           -----             -----
            Cash and cash equivalents, end of period                                                     $   945           $ 1,026
                                                                                                           =====             =====

            Supplemental disclosures of cash flow information:
                     Cash paid during the period for:

                                       Interest                                                          $ 2,702           $ 2,689
                                                                                                           =====             =====

                                       Income taxes                                                      $   450           $   515
                                                                                                           =====             =====
</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 subsidiaries, Fedcar, Inc. and
Carnegie  Federal  Funding  Corporation  ("CFFC").  Fedcar,  Inc.  is a  service
corporation that is currently  inactive.  CFFC was a special purpose  subsidiary
that was formed for the  issuance of  collateralized  mortgage  obligations.  In
September 1999, CFFC fully repaid the remaining  obligation and subsequently was
dissolved.

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, 2000 are not  necessarily  indicative  of the results to be expected for the
year  ending  March 31, 2001 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,
2000.

NOTE 2 -  Dividends on Common Stock
          -------------------------
On September 14, 2000,  the Board of Directors of the Company  declared a $0.075
per share cash  dividend on the  Company's  outstanding  shares of common stock,
payable to  stockholders of record as of September 30, 2000.  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 13, 2000. 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, 2000 and 1999,  the  Company's  total
comprehensive income was $337,000 and $286,000,  respectively,  and $620,000 and
$513,000,  respectively,  for the six months ended  September 30, 2000 and 1999.
Total  comprehensive  income is comprised of net income and other  comprehensive
income.  For both three and six month periods ended September 30, 2000 and 1999,
there was no other comprehensive income.

NOTE 4 -  Recent Accounting, Regulatory and Other Matters
          -----------------------------------------------
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as
amended by SFAS No. 137,  "Accounting  for  Derivative  Instruments  and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133," requires
that derivative  instruments be carried at fair value on the balance sheet.  The
statement continues to allow derivative  instruments to be used to hedge various
risks and sets  forth  specific  criteria  to be used to  determine  when  hedge
accounting can be used.  The statement  also provides for offsetting  changes in
fair  value  or cash  flows  of both  the  derivative  and the  hedged  asset or
liability to be recognized in earnings in the same period;  however, any changes
in fair value or cash flow that represent the ineffective portion of a hedge are
required to be  recognized  in earnings and cannot be deferred.  For  derivative
instruments  not accounted for as hedges,  changes in fair value are required to
be recognized in earnings.

The  provisions of this  statement as amended will be adopted by the Company for
its  quarterly  and  annual  reporting  beginning  April 1,  2001.  The  Company
anticipates, based on current activities, that the adoption of SFAS No. 133 will
not have a material effect on its financial position or results of operations.

                                       5

<PAGE>


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

NOTE 5 -  Earnings Per Share (EPS)
          ------------------------
Basic EPS is computed by dividing net income  applicable  to common stock by the
weighted average number of common shares outstanding during the period,  without
considering any dilutive  items.  Diluted EPS is computed by dividing net income
applicable to common stock by the weighted  average  number of common shares and
common stock  equivalents for items that are dilutive,  net of shares assumed to
be  repurchased  using the treasury  stock method at the average share price for
the Company's  common stock during the period.  Common stock  equivalents  arise
from the assumed  conversion  of  outstanding  stock  options and  unvested  RSP
shares.


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


                                             Three Months Ended                           Six Months Ended
                               -----------------------------------------       ------------------------------------
                                  September 30,           September 30,         September 30,        September 30,
                                      2000                    1999                  2000                 1999
                               -------------------      ----------------       ------------         ---------------

<S>                              <C>                   <C>                   <C>                   <C>
Basic EPS computation:
 Numerator-Net Income                $ 337,000             $ 286,000             $ 620,000             $ 513,000
 Denominator-Wt Avg common
shares outstanding                   3,147,845             3,354,208             3,189,127             3,351,462
Basic EPS                            $     .11             $     .08             $     .19             $     .15
                                           ===                   ===                   ===                   ===

Diluted EPS computation:
 Numerator-Net Income                $ 337,000             $ 286,000             $ 620,000             $ 513,000
                                     =========             =========             =========             =========
 Denominator-Wt Avg
   common shares outstanding         3,147,845             3,354,208             3,189,127             3,351,462
 Dilutive Stock Options                  3,878                    --                 1,950                    --
 Dilutive Unvested RSP                      --                    --                    --                    --
                                     ---------             ---------             ---------             ---------
 Weighted avg common shares
     and common stock equivalents    3,151,723             3,354,208             3,191,077             3,351,462
Diluted EPS                          $     .11             $     .08             $     .19             $     .15
                                           ===                   ===                   ===                   ===

</TABLE>

For both the three and six months ended September 30, 2000 and 1999,  15,366 and
30,946 RSP shares, respectively,  were excluded from the diluted EPS computation
due to their  anti-dilutive  effect.  For both three and six month periods ended
September  30, 1999,  155,246  Option  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, 2000 and 1999 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  26,046  and  55,110  at  September  30,  2000  and  1999,
respectively.

NOTE 6 - 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 $150,470,000 at September 30, 2000, are reflective
of a decrease of  $2,162,000  or 1.4% as compared to  $152,632,000  at March 31,
2000.  The decrease in total  assets was due to  decreases  in interest  bearing
deposits with other financial  institutions,  loans receivable,  mortgage-backed
securities,  and  premises  and  equipment,  partially  offset by  increases  in
investment  securities,  cash  and  amounts  due from  depository  institutions,
accrued interest receivable and prepaid expenses.

The decrease in the  Company's  liabilities  was  primarily  due to decreases in
savings  deposits and  escrows,  offset by an increase in Federal Home Loan Bank
("FHLB")  advances and accrued  expenses and other  liabilities.  Changes in the
components of assets, liabilities and equity are discussed herein.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing and noninterest-bearing  deposits, totaled $945,000, a decrease
of $781,000 or 45.2% as compared to $1,726,000 at March 31, 2000.  This decrease
was  primarily  due to decreased  interest-bearing  deposits  maintained  at the
Federal  Home Loan  Bank,  offset by  increased  non-interest  bearing  deposits
maintained at the Federal Reserve Bank of Cleveland and cash on hand.

Investment  Securities.  Investment  securities totaled $28,491,000 at September
30, 2000, an increase of $1,795,000 or 6.7%, as compared to $26,696,000 at March
31,  2000.  This was  primarily a result of  purchases  of $2.5  million of U.S.
Agency  securities,  offset by the proceeds from maturities,  calls and payments
totaling $695,000.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $57,118,000 at
September 30, 2000, a decrease of $2,063,000 or 3.5%, as compared to $59,181,000
at March 31, 2000.  The decrease was primarily due to principal  repayments  and
maturities totaling $5.2 million, offset by purchases of $3.2 million

Loans  Receivable,  net.  Net loans  receivable  at  September  30, 2000 totaled
$54,929,000,  a decrease of $1,575,000 or 2.8%,  as compared to  $56,504,000  at
March 31, 2000. The decrease was primarily due to principal  repayments totaling
$3.4 million,  offset by originations of $489,000 and purchases of $1.4 million.
The Company  originated  $215,000 one -to four-family and $151,000  multi-family
mortgages  and $123,000  consumer  loans  within its normal  lending  area.  The
Company purchased $302,000  Government  National Mortgage  Association  ("GNMA")
project  loans,  $752,000  Small  Business  Administration  ("SBA")  loans,  and
$326,000  government  guaranteed  agricultural  non-mortgage  loans  outside its
normal lending area, primarily in Pennsylvania.

Deposits. Total deposits, after interest credited,  decreased $2,562,000 or 3.4%
to  $73,021,000  at September 30, 2000, as compared to  $75,583,000 at March 31,
2000. The decrease was primarily due to decreases in certificates of deposit and
NOW accounts.

FHLB Advances.  FHLB advances,  at September 30, 2000, totaled  $49,500,000,  an
increase of $500,000 or 1.0%, as compared to  $49,000,000 at March 31, 2000. The
Company uses FHLB  advances as a supplement  to deposits to fund its purchase of
loans and investments.

Stockholders' Equity.  Stockholders' equity totaled $24,813,000 at September 30,
2000, as compared to  $25,143,000 at March 31, 2000. The decrease of $330,000 or
1.3% was primarily due to the purchase of 118,650 shares of treasury stock at an
average  cost of $6.81 per  share and the  payment  of two  $.075  regular  cash
dividends and one $.075 special cash dividend,  partially offset by earnings for
the six months ended September 30, 2000.

                                       7

<PAGE>


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

Results of Operations for the Three Months Ended September 30, 2000 and 1999

Net Income.  The Company  recorded  net income of $337,000  for the three months
ended  September  30, 2000,  as compared to net income of $286,000 for the three
months ended September 30, 1999. The $51,000 or 17.8% increase in net income for
the three  months  ended  September  30,  2000 was  primarily  the  result of an
increase in net interest income and a decrease in other  expenses,  offset by an
increase in provision for income taxes.  Changes in the components of income and
expense are discussed herein.

Net Interest Income. Net interest income increased $21,000 or 2.0% for the three
months ended  September  30,  2000,  as compared to the three month period ended
September  30, 1999.  Although the average  balance of  interest-earning  assets
decreased $5.2 million or 3.5%,  the average yield earned  thereon  increased 36
basis points. The average balance of interest-bearing  liabilities  decreased by
$4.6 million or 3.7%, however,  the average rate paid thereon increased 24 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,  increased to 2.17% for the three month period ended  September 30,
2000 from  2.05% for the three  month  period  ended  September  30,  1999.  The
increase in the net interest  rate spread was  primarily the result of increased
yields on the  average  balances of loans  receivable  and  mortgage  backed and
investment  securities,  partially offset by increased rates paid on the average
balance of certificates of deposits and FHLB advances.

Interest Income. Interest income increased $40,000 or 1.6% to $2,556,000 for the
three month period ended  September 30, 2000, as compared to $2,516,000  for the
three month period ended September 30, 1999.

Interest  on loans  receivable  decreased  $60,000 or 5.6% for the three  months
ended  September 30, 2000, as compared to the three month period ended September
30, 1999. This decrease was the result of a $5.2 million decrease in the average
balance of loans  receivable,  partially  offset by a 25 basis point increase in
the average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $103,000 or 11.5% for
the three months ended September 30, 2000, as compared to the three months ended
September 30, 1999.  This increase was the result of a $399,000  increase in the
average balance of  mortgage-backed  securities and a 67 basis point increase in
the average yield earned thereon.

Interest income on investment securities increased $37,000 or 8.6% for the three
months ended September 30, 2000, as compared to the three months ended September
30, 1999. The increase in interest income on investment securities was primarily
due to a $1.6 million higher average  balance of such  securities and a 17 basis
point increase in the average yield earned thereon.

Interest income on other interest-earning  assets decreased $40,000 or 38.1% for
the three months ended September 30, 2000, as compared to the three months ended
September 30, 1999. The decrease was primarily due to a $1.9 million decrease in
the  average  balance  of other  interest-earning  assets  and a 30 basis  point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 7.12%
and  6.76%  for the three  month  periods  ended  September  30,  2000 and 1999,
respectively.

Interest Expense. Interest expense totaled $1,504,000 for the three months ended
September  30,  2000,  as  compared to  $1,485,000  for the three  months  ended
September 30, 1999. The $19,000 or 1.3% increase was primarily due to a 24 basis
point  increase in the average rate paid on the total  average  interest-bearing
liabilities, partially offset by decreased average balances.

Interest expense on deposits  (including escrows) totaled $832,000 for the three
months  ended  September  30, 2000 as compared to $817,000  for the three months
ended September 30, 1999. The $15,000 or 1.8% increase was primarily due to a 26
basis point  increase in the average rate paid  thereon,  partially  offset by a
$3.1 million decrease in the average balance of deposits.

Interest on FHLB advances  increased  $36,000 or 5.7% for the three months ended
September  30, 2000,  as compared to the three months ended  September 30, 1999.
The increase  was  primarily  due to a 36 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.

Interest on bonds payable decreased by $32,000 or 100.0% due to the repayment of
the bond in its entirety.
                                       8
<PAGE>


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


Allowance for Loan Losses.  During the three month  periods ended  September 30,
2000 and 1999,  the  Company  established  provisions  for loan losses of $0 and
$1,000,  respectively.  This reflected management's evaluation of the underlying
credit risk of the loan portfolio and the level of allowance for loan losses.

At September 30, 2000,  the allowance for loan losses  totaled  $425,000 or .77%
and  3863.6% of total loans and total  non-performing  loans,  respectively,  as
compared to $425,000 or 0.8% and 885.4%,  respectively,  at March 31, 2000.  The
Company's  non-performing loans (non-accrual loans and accruing loans 90 days or
more  overdue)  totaled  $11,000 and $48,000 at September 30, 2000 and March 31,
2000  respectively,  which  represented  0.02% and 0.08% of the Company's  total
loans, respectively. The Company's ratio of non-performing loans to total assets
was 0.01% and 0.03% at September 30, 2000 and March 31, 2000, respectively.

Other Income.  During the three months ended  September  30, 2000,  other income
decreased  $3,000 or 14.3%,  as compared to the three months ended September 30,
1999.

Other  Expenses.  Total other  expenses  decreased by $46,000 or 7.4% during the
three months  ended  September  30, 2000,  as compared to the three months ended
September  30, 1999.  The decrease was  attributable  to decreases of $25,000 in
other expenses, $12,000 in compensation and employee benefits expense, $7,000 in
federal insurance premiums, and $2,000 in premises and occupancy costs.

Income Tax Expense.  The provision for income tax totaled $155,000 for the three
months ended  September  30, 2000,  as compared to $141,000 for the three months
ended  September  30,  1999.  The $14,000 or 9.9%  increase was due to increased
income.

Results of Operations for the Six Months Ended September 30, 2000 and 1999

Net Income. The Company recorded net income of $620,000 for the six months ended
September  30,  2000,  as compared to net income of $513,000  for the six months
ended  September 30, 1999.  The $107,000 or 20.9% increase in net income for the
six months ended  September  30, 2000 was primarily the result of an increase in
net interest income and a decrease in other  expenses,  offset by an increase in
provision for income taxes.  Changes in the components of income and expense are
discussed herein.

Net Interest Income.  Net interest income increased  $82,000 or 4.0% for the six
months  ended  September  30,  2000,  as compared to the six month  period ended
September  30, 1999.  Although the average  balance of  interest-earning  assets
decreased $4.9 million or 3.3%,  the average yield earned  thereon  increased 39
basis points. The average balance of interest-bearing  liabilities  decreased by
$4.5 million or 3.5%, however,  the average rate paid thereon increased 23 basis
points.

The net interest  rate spread  increased to 2.19% for the six month period ended
September 30, 2000 from 2.03% for the six month period ended September 30, 1999.
The  increase  in the net  interest  rate  spread  was  primarily  the result of
increased  yields  on the  average  balances  of all  interest  earning  assets,
partially offset by increased rates paid on savings deposits and FHLB advances.

Interest Income.  Interest income  increased  $115,000 or 2.3% to $5,117,000 for
the six month period ended September 30, 2000, as compared to $5,002,000 for the
six month period ended September 30, 1999.

Interest on loans receivable decreased $184,000 or 8.3% for the six months ended
September  30, 2000,  as compared to the six month period  ended  September  30,
1999.  This  decrease was the result of a $5.9  million  decrease in the average
balance of loans  receivable,  partially  offset by a 12 basis point increase in
the average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $275,000 or 15.9% for
the six months ended  September  30,  2000,  as compared to the six months ended
September 30, 1999.  This increase was the result of a $2.5 million  increase in
the average balance of mortgage-backed  securities and a 67 basis point increase
in the average yield earned thereon.

Interest income on investment  securities increased $96,000 or 11.5% for the six
months ended  September 30, 2000, as compared to the six months ended  September
30, 1999. The increase in interest income on investment  securities was due to a
$1.9 million  increase in the average  balance of such securities and a 26 basis
point increase in the average yield earned thereon.

Interest income on other interest-earning  assets decreased $72,000 or 35.5% for
the six months ended  September  30,  2000,  as compared to the six months ended
September 30, 1999. The decrease was primarily due to a $3.3 million decrease in
the average interest-earning deposits at other financial institutions, partially
offset by a 124 basis point increase 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 7.10%
and  6.71%  for the six  month  periods  ended  September  30,  2000  and  1999,
respectively.

Interest Expense.  Interest expense totaled  $2,991,000 for the six months ended
September 30, 2000, as compared to $2,958,000 for the six months ended September
30, 1999.  The $33,000 or 1.1%  increase was  primarily  due to a 23 basis point
increase  in the  average  rate  paid  on  the  total  average  interest-bearing
liabilities,   partially   offset  by   decreased   average   balances   of  all
interest-bearing liabilities.

Interest expense on deposits  (including escrows) totaled $1,647,000 for the six
months ended  September 30, 2000,  as compared to $1,633,000  for the six months
ended September 30, 1999. The $14,000 or 0.9% increase was primarily due to a 21
basis point  increase in the average rate paid  thereon,  partially  offset by a
$2.8 million decrease in the average balance of deposits.

Interest on FHLB  advances  increased  $82,000 or 6.5% for the six months  ended
September 30, 2000, as compared to the six months ended  September 30, 1999. The
increase was primarily due to a 40 basis point increase in the average rate paid
on advances,  partially offset by a $550,000  decrease in the average balance of
advances.

Interest on bonds payable decreased by $63,000 or 100.0% due to the repayment of
the bond in its entirety.

Provision for Loan Losses. During the six month periods ended September 30, 2000
and 1999, the Company  established  provisions for loan losses of $0 and $2,000,
respectively.  This reflected  management's  evaluation of the underlying credit
risk of the loan portfolio and the level of allowance for loan losses.

Other  Income.  During the six months ended  September  30,  2000,  other income
decreased  $5,000 or 10.2%,  as compared to the six months ended  September  30,
1999.

Other Expenses. Total other expenses decreased by $80,000 or 6.3% during the six
months ended  September 30, 2000, as compared to the six months ended  September
30, 1999. The decrease was  attributable to decreases of $42,000 in compensation
and employees  benefit  expense,  $21,000 in other expenses,  $14,000 in federal
insurance premiums,  and $3,000 in premises and occupancy costs. The decrease in
compensation  and employees  benefit  expense was due to decreases of $45,000 in
RSP expense and $22,000 in the  Company's  defined  benefit  plan,  Supplemental
Employee  Pension Plan ("SERP") and  Director's  Retirement  Plan ("DRP") costs,
offset by increases of $5,000 in ESOP  expense and $20,000 in  compensation  and
employee benefits expense.

Income Tax Expense.  The provision  for income tax totaled  $367,000 for the six
months  ended  September  30,  2000,  as compared to $315,000 for the six months
ended  September  30, 1999.  The $52,000 or 16.5%  increase was due to increased
income.

Liquidity and Capital Requirements

The Company's  subsidiary  bank, First Carnegie  Deposit,  is subject to various
requirements  administered by the federal banking agencies. The Bank is required
by Section 6 of the Home Owners'  Loan Act ("HOLA") to hold a prescribed  amount
of  statutorily  defined  liquid  assets.  The  Director  of  the  OTS  may,  by
regulation,  vary the  amount  of the  liquidity  requirement,  but only  within
pre-established  statutory  limits.  The  requirement  must be no less than four
percent and no greater than ten percent of the Bank's net withdrawable  accounts
and  borrowings  payable on demand or with  unexpired  maturities of one year or
less.  The  minimum  required  liquidity  is  currently  4%. The Bank's  average
liquidity  ratio was 151.68% and 154.76%,  at  September  30, 2000 and March 31,
2000, respectively.

                                       10
<PAGE>


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

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, 2000, the Bank was in compliance with its
three regulatory capital requirements as follows:

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

Tangible capital                                       $24,071         16.03%
Tangible capital requirement                             2,253          1.50%
                                                        ------         -----
Excess over requirement                                $21,818         14.53%
                                                        ======         =====

Core capital                                           $24,071         16.03%
Core capital requirement                                 4,506          3.00%
                                                        ------         -----
Excess over requirement                                $19,565         13.03%
                                                        ======         =====

Risk based capital                                     $24,496         53.92%
Risk based capital requirement                           3,634          8.00%
                                                        ------         -----
Excess over requirement                                $20,862         45.92%
                                                        ======         =====

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.


                                       11


<PAGE>


                           PART II - OTHER INFORMATION


Item 1.   Legal Proceedings.
          ------------------
          The  Company's  subsidiary  First  Carnegie  Deposit  and other  third
          parties have been  informed of an impending  legal action  regarding a
          previously  completed sale of foreclosed  real estate.  Although First
          Carnegie  Deposit has not been served as a defendant  in any  lawsuit,
          the Company  has  notified  its  insurance  carrier of this  potential
          action.  At this time management  believes this action,  if commenced,
          will not result in significant loss to the Company.

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

Item 2.   Changes in Securities.
          ----------------------
          Not applicable.

Item 3.   Defaults Upon Senior Securities.
          --------------------------------
          Not applicable.

Item 4.   Submission of Matters to a Vote of Security-Holders.
          ----------------------------------------------------
          The Annual Meeting of Stockholders of the Company was held on July 20,
          2000 and the following matters were voted on:

          1. Election of director for 3-year term expiring in 2003:

                                                   For              Withheld
                                                ---------           --------
                    John C. Burne               3,030,082            74,493


          2. Ratification of appointment of Stokes Kelly & Hinds, LLC as auditor
             for the fiscal year ending March 31, 2001:

                                               For      Against      Abstain
                                            ---------   -------      -------
                                            3,068,247    20,171      16,157


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.

<TABLE>
<CAPTION>
<S>                                                  <C>

                                                         SKIBO FINANCIAL CORP.




Date: October 20, 2000                               By: /s/ Walter G. Kelly
                                                         -----------------------------------------------
                                                         Walter G. Kelly
                                                         President and Chief Executive Officer
                                                         (Duly Authorized Representative)
</TABLE>

          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 20, 2000                                   Date: October 20, 2000


</TABLE>