SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended June 30, 2003
                               -------------

|_|  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 July 29, 2003


$0.10 Par Value Common Stock                                  3,153,344
----------------------------                           ---------------------
                 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
                  June 30, 2003 (unaudited) and March 31, 2003.................1

                  Consolidated Statements of Income for the three
                  months ended June 30, 2003 and 2002 (unaudited)..............2

                  Consolidated Statement of Stockholders' Equity for the
                  three months ended June 30, 2003 (unaudited).................3

                  Consolidated Statements of Cash Flows for the three
                  months ended June 30, 2003 and 2002 (unaudited)..............4

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


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


Item 3.     Controls and Procedures...........................................10


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

                                        2

<PAGE>


                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                      June 30,    March 31,
                                                                        2003         2003
                                                                     ---------    ---------
                    ASSETS                                          (Unaudited)
                    ------
<S>                                                                <C>          <C>
Cash and amounts due from depository institutions                    $     859    $     828
Interest-bearing deposits with other institutions                        1,758        3,800
Investment securities:
     Held-to-maturity (market value $10,150 and $8,465)                 10,076        8,356
Mortgage-backed securities:
     Held-to-maturity (market value $96,864 and $97,570)                95,031       95,305
Real estate owned, net                                                       8           28
Loans receivable, net                                                   40,462       39,672
Accrued interest receivable:
     Investment securities                                                  91           91
     Mortgage-backed securities                                            473          506
     Loans receivable                                                      361          354
Federal Home Loan Bank stock, at cost                                    2,878        2,879
Premises and equipment, net                                                495          505
Prepaid expenses and other assets                                        4,921        4,935
                                                                     ---------    ---------
        Total Assets                                                 $ 157,413    $ 157,259
                                                                     =========    =========

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

Liabilities:
     Deposits                                                        $  81,837    $  81,842
     Federal Home Loan Bank advances                                    48,000       48,000
     Advances from borrowers for taxes and insurance                       101           77
     Accrued expenses and other liabilities                              4,048        3,863
                                                                     ---------    ---------
        Total Liabilities                                              133,986      133,782


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                                          9,777        9,777
     Treasury stock, at cost (308,470 shares at both June 30, 2003
         and March 31, 2003)(1)                                         (2,149)      (2,149)
     Retained earnings, substantially restricted                        15,454       15,504
                                                                     ---------    ---------
        Total Stockholders' Equity                                      23,427       23,477
                                                                     ---------    ---------

        Total Liabilities and Stockholders' Equity                   $ 157,413    $ 157,259
                                                                     =========    =========
</TABLE>

(1)Included are shares held by the Bank's RSP  totaling  11,840 at both June 30,
     2003 and March 31, 2003.

See accompanying notes to consolidated financial statements.

                                        1

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                        Consolidated Statements of Income

                For the Three Months Ended June 30, 2003 and 2002

              (Dollar amounts in thousands, except per share data)


<TABLE>
<CAPTION>
                                                                        2003           2002
                                                                    -----------    -----------
                                                                            (Unaudited)
<S>                                                               <C>            <C>
Interest income:
     Loans receivable                                               $       593    $       784
     Mortgage-backed securities                                           1,045          1,114
     Investment securities                                                  105            245
     Other                                                                   28             30
                                                                    -----------    -----------
            Total interest income                                         1,771          2,173

Interest expense:
     Deposits                                                               577            710
     Federal Home Loan Bank advances                                        663            663
                                                                    -----------    -----------
           Total interest expense                                         1,240          1,373
                                                                    -----------    -----------

           Net interest income                                              531            800

Provision for loan losses                                                    --             --
                                                                    -----------    -----------
           Net interest income after provision for loan losses              531            800

Other income:
     Fees and service charges                                                11             16
     Other                                                                   39             35
                                                                    -----------    -----------
           Total other income                                                50             51

Other expenses:
     Compensation and employee benefits                                     489            536
     Premises and occupancy costs                                            44             49
     Federal insurance premiums                                               3              4
     Other operating expenses                                               115             76
                                                                    -----------    -----------
           Total other expenses                                             651            665
                                                                    -----------    -----------

             (Loss) income before income taxes                              (70)           186

(Benefit from) Provision for income taxes                                   (20)            71
                                                                    -----------    -----------
           Net (loss) income                                                (50)           115

Other comprehensive (loss) income:
     Unrealized gain on securities available-for-sale, net of tax            --             --
                                                                    -----------    -----------
           Total comprehensive (loss) income                        $       (50)   $       115
                                                                    ===========    ===========

Basic (loss) earnings per share                                     $      (.02)   $       .04
Diluted (loss) earnings per share                                   $      (.02)   $       .04

Weighted average shares outstanding - Basic                           3,153,344      3,139,367
Weighted average shares outstanding - Diluted                         3,225,963      3,212,531

</TABLE>

 See accompanying notes to consolidated financial statements.

                                        2

<PAGE>


                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity

              For the Three Months Ended June 30, 2003 (unaudited)

              (Dollar amounts in thousands, except per share data)


                                         Additional
                               Common     Paid-in    Treasury  Retained
                                Stock     Capital      Stock   Earnings   Total
                                -----     -------      -----   --------   -----

Balance at March 31, 2003        $345      $9,777   $(2,149)    $15,504 $23,477

Net loss                           --          --         --       (50)    (50)
                                 ----      ------   -------     ------- -------

Balance at June 30, 2003         $345      $9,777   $(2,149)    $15,454 $23,427
                                 ====      ======   =======     ======= =======



See accompanying notes to consolidated financial statements.


                                        3

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                For the Three Months Ended June 30, 2003 and 2002

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                    2003       2002
                                                                                   -------    -------
                                                                                      (Unaudited)
<S>                                                                              <C>        <C>
Operating activities:
Net (loss) income                                                                  $   (50)   $   115
Adjustments to reconcile net (loss) income to net cash
  (used in) provided by operating activities:
     Depreciation                                                                       11         16
     Loss on write-down of real estate owned                                            20         --
     Compensation expense-RSP                                                           --          4
     Net accretion of premiums and discounts                                           (81)       (22)
     Decrease in accrued interest receivable                                            26         90
     Decrease (increase) in prepaid expenses                                            14        (47)
     Increase in accrued interest payable                                              128        119
     (Decrease) increase in accrued income taxes                                      (119)         1
     Other, net                                                                        155        437
                                                                                   -------    -------
          Net cash provided by operating activities                                    104        713
                                                                                   -------    -------

Investing activities:
Purchases of premises and equipment                                                     (1)        (2)
Purchases of investment securities held-to maturity                                 (3,895)      (300)
Purchases of mortgage-backed securities held-to-maturity                            (9,328)    (9,150)
Proceeds from maturities/calls and principal repayments of:
     Investment securities held-to-maturity                                          2,173      1,565
     Mortgage-backed securities held-to-maturity                                     9,627      6,676
Loans purchased                                                                     (5,260)    (2,476)
Net principal repayments on loans                                                    4,549      2,513
Decrease (increase) in Federal Home Loan Bank stock                                      1        (35)
                                                                                   -------    -------
          Net cash used in investing activities                                     (2,134)    (1,209)
                                                                                   -------    -------



Financing activities:
Net (decrease) increase in deposits                                                     (5)       195
Net increase (decrease) in mortgage escrow                                              24         (4)
Treasury stock purchased                                                                --        (10)
Cash dividends paid                                                                     --       (522)
                                                                                   -------    -------
          Net cash provided by (used in) financing activities                           19       (341)
                                                                                   -------    -------

Net decrease in cash and cash equivalents                                           (2,011)      (837)
Cash and cash equivalents, beginning of period                                       4,628      4,577
                                                                                   -------    -------
Cash and cash equivalents, end of period                                           $ 2,617    $ 3,740
                                                                                   =======    =======

Supplemental  disclosures of cash flow information:
Cash paid during the period for:
  Interest                                                                         $ 1,112    $ 1,254
                                                                                   =======    =======
  Income taxes                                                                     $   101    $   136
                                                                                   =======    =======

</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  ended June 30,  2003 are not
necessarily  indicative  of the results to be expected for the year ending March
31, 2004 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, 2003.

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

During the quarter ended June 30, 2003, the Company did not declare a dividend.

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 (Loss) Income
          ---------------------------

For the three  months  ended  June 30,  2003 and  2002,  the  Company  had total
comprehensive  loss of  $50,000  and total  comprehensive  income  of  $115,000,
respectively.  Total comprehensive income or loss is comprised of net income and
other  comprehensive  income.  For both three month periods,  there was no other
comprehensive income.

NOTE 4 - Recent Accounting Pronouncements
         --------------------------------

In April 2003,  the FASB  issued SFAS No. 149  "Amendment  of  Statement  133 on
Derivative  Instruments  and Hedging  Activities"  ("SFAS No.  149"),  which was
issued to amend SFAS 133, "Derivative  Instruments and Hedging Activities".  The
effective date of this Statement is for contracts  entered into or amended after
June 30,  2003.  The Company  does not believe that the adoption of SFAS No. 149
will have a significant impact on its consolidated financial statements.

In May 2003,  the FASB issued  SFAS No. 150  "Accounting  for Certain  Financial
Instruments  with  Characteristics  of both  Liabilities  and Equity" ("SFAS No.
150").  The  effective  date for this  Statement  is for  financial  instruments
entered into or modified  after May 31, 2003,  and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
does not  believe  that the  adoption  of SFAS No.  150 will have a  significant
impact on its consolidated financial statements.

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.

                                        5

<PAGE>

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



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


<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                           --------------------------
                                                             June 30,       June 30,
                                                               2003           2002
                                                           -----------    -----------
<S>                                                      <C>            <C>
Basic EPS computation:
 Numerator-Net (Loss) Income                               $   (50,000)   $   115,000
 Denominator-Wt Avg common shares outstanding                3,153,344      3,139,367
Basic (loss) earnings per share                            $      (.02)   $       .04
                                                           ===========    ===========

Diluted EPS computation:
 Numerator-Net (Loss) Income                               $   (50,000)   $   115,000
 Denominator-Wt Avg common shares outstanding                3,153,344      3,139,367
 Dilutive Stock Options                                         72,619         73,164
                                                           -----------    -----------
 Weighted avg common shares and common stock equivalents     3,225,963      3,212,531
Diluted (loss) earnings per share                          $      (.02)   $       .04
                                                           ===========    ===========
</TABLE>


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  $157,413,000 at June 30, 2003, are reflective of
an increase of $154,000 or 0.1%, as compared to  $157,259,000 at March 31, 2003.
The  increase in total  assets was due to increases in cash and amounts due from
depository institutions,  loans receivable, and investment securities, offset by
decreases in  mortgage-backed  securities,  Federal  Home Loan Bank stock,  real
estate owned, prepaid expenses and other assets,  interest-bearing deposits with
other  financial  institutions,  premises  and  equipment  and accrued  interest
receivable.

The  increase  in the  Company's  liabilities  was due to  increases  in accrued
expenses  and  other  liabilities  and  advances  from  borrowers  for taxes and
insurance,  offset by a  decrease  in  deposits.  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  $2,617,000,  a
decrease  of  $2,011,000  or 43.5% from the prior  quarter.  This  decrease  was
primarily due to decreased  interest-bearing  deposits maintained at the Federal
Home Loan Bank ("FHLB").

Investment  Securities.  Investment  securities totaled  $10,076,000 at June 30,
2003, an increase of $1,720,000 or 20.6%, as compared to $8,356,000 at March 31,
2003.  The increase was primarily  due to purchases of $3.9 million U.S.  Agency
securities,  offset by proceeds  received  from  maturities,  calls and payments
totaling $2.2 million.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $95,031,000 at
June 30, 2003,  a decrease of $274,000 or 0.3%,  as compared to  $95,305,000  at
March 31, 2003.  The  decrease was  primarily  due to principal  repayments  and
maturities totaling $9.6 million, partially offset by purchases of $9.3 million.

Loans   Receivable,   net.  Net  loans  receivable  at  June  30,  2003  totaled
$40,462,000,  an increase of $790,000  or 2.0%,  as compared to  $39,672,000  at
March 31, 2003. The increase was primarily due to the  origination of $42,000 in
consumer loans, and purchases of $1.1 million  conventional  one- to four-family
mortgage loans, $160,000 insured Federal Housing  Administration ("FHA") one- to
four-family  mortgage loans,  $2.8 million  insured United States  Department of
Agriculture ("USDA") farm loans, $937,000 insured Small Business  Administration
("SBA") loans, and a $202,000  insured USDA operating loan,  partially offset by
loan principal repayments totaling $4.6 million.

Deposits. Total deposits, after interest credited,  decreased by $5,000 or 0.01%
to  $81,837,000  at June 30, 2003, as compared to $81,842,000 at March 31, 2003.
The decrease was due to decreases in  certificates  of deposit and  non-interest
bearing  checking  accounts,  offset by  increases  in passbook  savings,  money
market, and interest- bearing checking accounts.

FHLB Advances. FHLB advances totaled $48,000,000 at both June 30, 2003 and March
31, 2003. The Company uses FHLB advances as a supplement to deposits to fund its
purchase of loans and investments.

Stockholders' Equity. Stockholders' equity totaled $23,427,000 at June 30, 2003,
as compared to  $23,477,000  at March 31, 2003.  The decrease of $50,000 or 0.2%
was due to losses for the three months ended June 30, 2003.

                                        7

<PAGE>

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


Results of Operations for the Three Months Ended June 30, 2003 and 2002

Net (Loss) Income. The Company recorded net loss of $50,000 for the three months
ended June 30, 2003,  as compared to net income of $115,000 for the three months
ended June 30, 2002. The $165,000 or 143.5% decrease in net income for the three
months  ended  June 30,  2003 was  primarily  the  result of a  decrease  in net
interest  income,  partially offset by decreases in other expenses and provision
for income taxes.  Changes in the components of income and expense are discussed
herein.

Net Interest  Income.  Net interest income  decreased  $269,000 or 33.6% for the
three months  ended June 30,  2003,  as compared to the three month period ended
June 30, 2002. The average  balance of  interest-earning  assets  increased $2.6
million or 1.8%,  however,  the average yield earned thereon decreased 117 basis
points. The average balance of interest- bearing  liabilities  increased by $3.3
million or 2.6%,  however,  the average  rate paid  thereon  decreased  53 basis
points.

The net  interest  rate  spread,  which is the  difference  between the yield on
average  interest-earning  assets  and  the  cost  of  average  interest-bearing
liabilities,  decreased  to 0.86% for the three month period ended June 30, 2003
from 1.50% for the three month period  ended June 30, 2002.  The decrease in the
net interest  rate spread was  primarily  the result of decreased  yields on the
average balances of interest earning assets, partially offset by decreased rates
paid on the average balance of deposits.

Interest Income.  Interest income decreased  $402,000 or 18.5% to $1,771,000 for
the three month period ended June 30, 2003,  as compared to  $2,173,000  for the
three month period ended June 30, 2002.

Interest on loans  receivable  decreased  $191,000 or 24.4% for the three months
ended June 30, 2003,  as compared to the three months ended June 30, 2002.  This
decrease  was  primarily  the result of a $5.9  million  decrease in the average
balance of loans  receivable and an 89 basis point decrease in the average yield
earned thereon.

Interest income on mortgage-backed  securities decreased $69,000 or 6.2% for the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002.  This decrease was  primarily the result of a 112 basis point  decrease in
the average yield earned on  mortgage-backed  securities,  partially offset by a
$14.1 million increase in the average balance of mortgage-backed securities.

Interest  income on investment  securities  decreased  $140,000 or 57.1% for the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002. The decrease in interest income on investment securities was primarily due
to a decrease of $7.9 million in the average  balance of such  securities  and a
115 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning assets decreased by $2,000 or 6.7% for
the three months ended June 30, 2003, as compared to the three months ended June
30, 2002.  The decrease was primarily  due to a 106 basis point  decrease in the
average yield earned on other  interest-earning  assets,  partially  offset by a
$2.4 million increase in the average balance.

The average yield on the average  balance of  interest-earning  assets was 4.71%
and  5.88%  for  the  three  month   periods  ended  June  30,  2003  and  2002,
respectively.

Interest Expense. Interest expense totaled $1,240,000 for the three months ended
June 30,  2003,  as compared to  $1,373,000  for the three months ended June 30,
2002.  The  $133,000  or 9.7%  decrease  was  primarily  due to a 53 basis point
decrease  in the  average  rate  paid  on  the  total  average  interest-bearing
liabilities,  partially offset by a $3.3 million increase in the average balance
of deposits.

Interest expense on deposits  (including escrows) totaled $577,000 for the three
months ended June 30,  2003,  as compared to $710,000 for the three months ended
June 30, 2002.  The $133,000 or 18.7%  decrease was primarily due to an 81 basis
point  decrease in the  average  rate paid on deposits  and  escrows,  partially
offset by a $3.3 million increase in the average balance of deposits.

Interest on FHLB  advances  totaled  $663,000 for both three month periods ended
June 30, 2003 and 2002.  The Company uses FHLB advances as a funding  source and
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 OPERATIONS


Provision for Loan Losses. Based upon management's  evaluation of the underlying
credit risk of the loan  portfolio  and the level of allowance  for loan losses,
the Company  established  no  provisions  for loan losses during the three month
periods ended June 30, 2003 and 2002.

At June 30, 2003,  the  allowance for loan losses  totaled  $405,000 or 1.0% and
794.1% of total loans and total non-performing loans, respectively,  as compared
to $425,000 or 1.1% and 904.3%,  respectively,  at March 31, 2003. The Company's
non-  performing  loans  (non-accrual  loans and accruing  loans 90 days or more
overdue)  totaled  $51,000  and  $47,000  at June 30,  2003 and March 31,  2003,
respectively,  which  represented  0.12% of the  Company's  total loans for both
periods.  The Company's ratio of non-performing  loans to total assets was 0.03%
at both June 30, 2003 and March 31, 2003.

Other  Income.  During  the three  months  ended  June 30,  2003,  other  income
decreased $1,000 or 2.0%, as compared to the three months ended June 30, 2002.

Other  Expenses.  Total other  expenses  decreased by $14,000 or 2.1% during the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002.  The  decrease  was  primarily  attributable  to  decreases  of $47,000 in
compensation  and employee  benefits  expense,  $5,000 in premises and occupancy
costs,  and $1,000 in  federal  insurance  premiums,  offset by an  increase  of
$39,000 in other operating  expenses  primarily due to increased legal fees. The
decrease in compensation  and employee  benefits expense was due to decreases of
$28,000 in compensation and employee benefits expense, $4,000 in RSP expense due
to the  completion  of the RSP  awards on April 16,  2002,  and  $15,000  in the
Company's defined benefit plan,  Supplemental  Employee Retirement Plan ("SERP")
and Director's Retirement Plan ("DRP") costs.

Income Tax Expense.  The income tax benefit totaled $20,000 for the three months
ended June 30, 2003,  as compared to the provision for income tax of $71,000 for
the three months ended June 30, 2002. The $91,000 or 128.2%  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 June 30, 2003,  the Bank was in  compliance  with its
three regulatory capital requirements as follows:


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

Tangible capital .....................................   $22,992      14.60%
Tangible capital requirement .........................     2,362       1.50
                                                         -------      -----
Excess over requirement ..............................   $20,630      13.10%
                                                         =======      =====

Core capital .........................................   $22,992      14.60%
Core capital requirement .............................     4,724       3.00
                                                         -------      -----
Excess over requirement ..............................   $18,268      11.60%
                                                         =======      =====

Risk based capital ...................................   $23,397      60.52%
Risk based capital requirement........................     3,093       8.00
                                                         -------      -----
Excess over requirement ..............................   $20,304      52.52%
                                                         =======      =====


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 changes in 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.

                                        9

<PAGE>

                             CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Controls

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

                                       10

<PAGE>

                           PART II - OTHER INFORMATION




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

               There are  various  claims and  lawsuits  in which the Company is
               periodically   involved,   such  as  claims  to  enforce   liens,
               condemnation proceedings on properties in which the Company holds
               security interests,  claims involving the making and servicing of
               real  property  loans and other issues  incident to the Company's
               business.

               In  February  2003,  the  Company's  subsidiary,  First  Carnegie
               Deposit,  was  served as a  defendant  in a lawsuit  regarding  a
               previously  completed sale of foreclosed  real estate and sheriff
               sales  of  two  other  properties  resulting  from  a  deficiency
               judgment in connection  therewith.  The  complaint  (Civil Action
               No.:  GD00-8816)  was filed on February  28, 2003 in the Court of
               Common Pleas of Allegheny County,  Pennsylvania,  Civil Division,
               and amended on July 2, 2003.  The  complaint  contains  causes of
               action  against  First  Carnegie  Deposit for  Statutory  Damages
               Pursuant to 42 PA C.S.A.  Sec.  8104 (Count I),  Wrongful  Use of
               Civil Proceedings  Pursuant to 42 PA C.S.A. Sec. 8351 (Count II),
               Abuse of Civil  Process  (Count III),  Conversion  (Count IV) and
               Civil  Conspiracy  (Count V). The plaintiffs seek damages for the
               costs to defend the prior  litigation  related to the foreclosure
               and sheriff sales of properties owned by the plaintiffs,  loss of
               reputation, loss of use of their properties and extreme emotional
               distress,  as well as punitive damages.  The Company is unable to
               express  an  opinion  as to the  outcome  of this  lawsuit or any
               potential loss to the Company.


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

               Not applicable.


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

               Not applicable.


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

               Not applicable.


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

               Not applicable.


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

               a) Not applicable

               b) On April  29,  2003,  the  Company  filed a Form 8-K to report
                  earnings for the quarter and fiscal year ended March 31, 2003.
                  (Items 7 and 12)

                                       11

<PAGE>

                                   SIGNATURES

          Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.





                                         SKIBO FINANCIAL CORP.


Date: July 29, 2003
                                     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,
(Principal Executive Officer)                  Secretary and Treasurer
                                               (Principal Financial and Accounting Officer)

Date: July 29, 2003                            Date: July 29, 2003

</TABLE>


<PAGE>

                            SECTION 302 CERTIFICATION


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

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

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

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

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

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

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

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

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

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

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

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



         Date: July 29, 2003               /s/Walter G. Kelly
                                           -------------------------------------
                                           Walter G. Kelly
                                           President and Chief Executive Officer
<PAGE>

                            SECTION 302 CERTIFICATION


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

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

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

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

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

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

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

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

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

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

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

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



         Date: July 29, 2003              /s/Carol A. Gilbert
                                          --------------------------------------
                                          Carol A. Gilbert
                                          Chief Financial and Operating Officer,
                                          Secretary and Treasurer