SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

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

For the quarterly period ended December 31, 1999
                               -----------------

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

For the transition period from                 to
                                ---------------   ---------------

SEC File Number:   000-25009
                  ----------

                              SKIBO FINANCIAL CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              United States                           25-1820465
------------------------------------------          ----------------
         (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)             Identification No.)

242 East Main Street, Carnegie, Pennsylvania              15106
--------------------------------------------       ------------------
  (Address of principal executive offices)             (Zip Code)

                                  (412)276-2424
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


         Check  whether the  registrant:  (1) filed all  reports  required to be
filed by Sections 13 or 15(d) of the Securities  Exchange Act of 1934 subsequent
to the preceding 12 months (or for such shorter  period that the  registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes   X    No
     ---      ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

                  Number of shares outstanding of common stock
                             as of January 31, 2000


$0.10 Par Value Common Stock                     3,322,509 Shares
----------------------------                    ------------------
Class                                              Outstanding

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

<PAGE>


                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

         TABLE OF CONTENTS                                                 Page
         -----------------                                                 ----



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


Item 1.    Financial Statements


            Consolidated Statements of Financial Condition As of
            December 31, 1999 (unaudited) and March 31, 1999                 1

            Consolidated Statements of Income for the three and
                 nine months ended December 31, 1999 and 1998 (unaudited))   2

            Consolidated Statement of Stockholders' Equity for the
            nine months ended December 31, 1999 (unaudited)                  3

            Consolidated  Statements  of Cash  Flows  for the nine  months
            ended December 31, 1999 and 1998 (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 Subsidiary

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                      December 31,      March  31,
                                                                                         1999             1999
                                                                                         ----             ----
                     ASSETS                                                            (Unaudited)
                     ------
<S>                                                                                   <C>              <C>
 Cash and amounts due from depository institutions                                     $    528         $   1,288
 Interest-bearing deposits with other institutions                                        2,034             1,211
 Investment securities:
          Held-to-maturity (market value $24,730 and $24,703)                            26,701            25,087
 Mortgage-backed securities:
          Held-to-maturity (market value $59,070 and $54,605)                            60,234            54,365
 Loans receivable, net                                                                   57,695            65,309
 Accrued interest receivable:
          Investment securities                                                             365               400
          Mortgage-backed securities                                                        412               382
          Loans receivable                                                                  489               726
 Federal Home Loan Bank stock, at cost                                                    2,615             2,465
 Premises and equipment, net                                                                645               695
 Prepaid expenses and other assets                                                        3,782             3,128
                                                                                      ---------         ---------

                   Total Assets                                                       $ 155,500         $ 155,056
                                                                                        =======           =======

                           LIABILITIES AND STOCKHOLDERS' EQUITY

 Liabilities:
          Savings deposits                                                              $76,111          $ 76,917
          Federal Home Loan Bank advances                                                52,300            49,300
          Bonds payable                                                                      --             1,299
          Advances from borrowers for taxes and insurance                                   133               143
          Accrued expenses and other liabilities                                          1,938             2,267
                                                                                      ---------         ---------

                   Total Liabilities                                                    130,482           129,926


 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                                                               9,749             9,755
 Treasury stock, at cost (135,328 shares at December 31, 1999
    and 5,228 shares at March 31, 1999)(1)                                                (943)              (65)
 Unearned employee stock ownership plan (ESOP) shares                                     (313)             (458)
 Unearned restricted stock plan (RSP) shares                                              (247)             (392)
 Retained earnings, substantially restricted                                             16,427            15,945
                                                                                      ---------         ---------

                   Total Stockholders' Equity                                            25,018            25,130
                                                                                      ---------         ---------

                   Total Liabilities and Stockholders' Equity                         $ 155,500         $ 155,056
                                                                                      =========         =========
</TABLE>

(1)Included  are shares held by the Bank's RSP  totaling  7,863 at December  31,
1999 and 5,228 at March 31, 1999, respectively.

See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                        Consolidated Statements of Income

         For the Three and Nine months Ended December 31, 1999 and 1998

              (Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                         Three Months Ended           Nine months Ended
                                                                            December 31,                 December 31,
                                                                         1999          1998           1999            1998
                                                                         ----          ----           ----            ----
                                                                             (unaudited)                (unaudited)
<S>                                                                 <C>            <C>            <C>             <C>
 Interest income:
          Loans receivable                                            $ 1,047         $1,149        $ 3,277         $ 3,584
          Mortgage-backed securities                                      993            828          2,727           2,551
          Investment securities                                           437            331          1,272             848
          Other                                                            62             93            265             262
                                                                        -----          -----          -----           -----
                       Total interest income                            2,539          2,401          7,541           7,245

 Interest expense:
          Savings deposits                                                814            865          2,447           2,616
          Federal Home Loan Bank advances                                 683            548          1,945           1,625
          Bonds payable                                                    --             35             63             113
          Other borrowings                                                 --             14             --              42
                                                                        -----          -----          -----           -----
                       Total interest expense                           1,497          1,462          4,455           4,396
                                                                        -----          -----          -----           -----

                       Net interest income                              1,042            939          3,086           2,849

 Provision for loan losses                                                  1              5              3              20
                                                                        -----          -----          -----           -----
                       Net interest income after
                         provision for loan losses                      1,041            934          3,083           2,829
 Other income:
          Fees and service charges                                         10             14             41              39
          Other                                                            12              3             30              27
                                                                        -----          -----          -----           -----
                       Total other income                                  22             17             71              66

 Other expenses:
          Compensation and employee benefits                              475            573          1,425           1,606
          Premises and occupancy costs                                     51             54            161             166
          Federal insurance premiums                                       12             11             34              35
          Other operating expenses                                         61             93            242             281
                                                                        -----          -----          -----           -----
                       Total other expenses                               599            731          1,862           2,088
                                                                        -----          -----          -----           -----

                 Income before income taxes                               464            220          1,292             807

 Provision for income taxes                                               184             95            499             335
                                                                        -----          -----          -----           -----
                       Net income                                       $ 280          $ 125          $ 793            $472
                                                                        =====          =====          =====            ====



 Basic earnings per share                                               $ .09          $ .04           $.24            $.14
 Diluted earnings per share                                             $ .09          $ .04           $.24            $.14

 Weighted average shares outstanding - Basic                        3,282,193      3,350,617      3,327,324       3,356,716
 Weighted average shares outstanding - Diluted                      3,282,193      3,372,922      3,327,324       3,364,151

</TABLE>

 See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                 Consolidated Statement of Stockholders' Equity

             For the Nine months Ended December 31, 1999 (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, 1999                     $345        $9,755      $ (65)        $(458)        $(392)      $15,945      $25,130

Cash dividends declared net
  ($.45 per share)                              --            --          --            --            --         (311)        (311)

Excess of fair value above cost of
 ESOP shares released or committed
   to be released                               --            (6)         --            --            --           --          (6)

Amortization of ESOP liability                  --            --          --           145            --           --          145

Amortization of RSP liability                   --            --          --            --           145           --          145

Treasury stock purchased,
 at cost (130,100 shares)                       --            --        (878)           --            --           --         (878)

Net income                                      --            --          --            --            --          793          793
                                        -------------------------------------------------------------------------------------------


Balance at December 31, 1999                  $345        $9,749       $(943)        $(313)        $(247)     $16,427      $25,018
                                        ===========================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       3

<PAGE>

                      SKIBO FINANCIAL CORP. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

              For the Nine months Ended December 31, 1999 and 1998

                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                      1999         1998
                                                                                      ----         ----
                                                                                         (unaudited)
<S>                                                                                <C>         <C>
Operating activities:
         Net income                                                                 $    793    $    472
         Adjustments to reconcile net income to net cash
                  (used in) provided by operating activities:
                           Provision for loan losses                                       3          20
                           Depreciation                                                   60          66
                           Compensation expense-ESOP and RSP                             284         519
                           Net amortization of premiums and discounts                    210          82
                           Decrease (increase)  in accrued interest receivable           242         (16)
                           Increase in prepaid expenses                                 (585)       (682)
                           Decrease in accrued interest payable                         (169)       (297)
                           Decrease in accrued income taxes                             (179)       (121)
                           Other, net                                                    (63)         60
                                                                                    --------    --------
                                    Net cash provided by operating activities            596         103
                                                                                    --------    --------

Investing activities:
         Purchases of premises and equipment                                             (10)        (22)
         Purchases of investment securities held-to maturity                          (5,446)    (17,187)
         Purchases of mortgage-backed securities held-to-maturity                    (17,287)    (11,290)
         Proceeds from maturities/calls and principal repayments of:
                  Investment securities held-to-maturity                               3,819       6,941
                  Mortgage-backed securities held-to-maturity                         11,325      12,658
         Loans purchased                                                              (3,424)     (9,333)
         Net principal repayments on loans                                            10,944      14,643
         Increase in Federal Home Loan Bank stock                                       (150)         (8)
                                                                                    --------    --------
                              Net cash provided by (used in) investing activities       (229)     (3,598)
                                                                                    --------    --------

Financing activities:
         Net increase (decrease) in savings deposits                                    (806)        182
         Proceeds from Federal Home Loan Bank advances                                14,400      23,000
         Repayment of Federal Home Loan Bank advances                                (11,400)    (20,000)
         Principal repayment of bonds payable                                         (1,299)       (843)
         Net decrease in mortgage escrow                                                 (10)        (12)
         Treasury stock purchased                                                       (878)        (65)
         Common stock acquired for RSP                                                    --        (770)
         Cash dividends paid                                                            (311)       (214)
                                                                                    --------    --------
                  Net cash used in financing activities                                 (304)      1,278
                                                                                    --------    --------

Net increase (decrease) in cash and cash equivalents                                      63      (2,217)
Cash and cash equivalents, beginning of period                                         2,499       3,271
                                                                                    --------    --------
Cash and cash equivalents, end of period                                            $  2,562    $  1,054
                                                                                    ========    ========

Supplemental disclosures of cash flow information:
         Cash paid during the period for:
                  Interest                                                          $  4,624    $  4,694
                                                                                    ========    ========

                  Income taxes                                                      $    715    $    530
                                                                                    ========    ========
</TABLE>


See accompanying notes to consolidated financial statements.

                                       4
<PAGE>



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


NOTE 1 -  Corporate Reorganization
          ------------------------

On October 29, 1998, First Carnegie Deposit  reorganized into a two-tier holding
company  structure.  First  Carnegie  Deposit  formed a new mid-tier,  federally
chartered,  stock holding company, Skibo Financial Corp. (the "Company"),  which
is 55% owned by Skibo  Bancshares,  M.H.C.  As a result of this  reorganization,
Skibo  Financial Corp.  became the parent company of First Carnegie  Deposit and
owns 100% of First  Carnegie  Deposit's  common stock.  Upon  surrender of First
Carnegie  Deposit  common  stock,  shareholders  of record on October  29,  1998
received,  on a three-for-two  basis,  shares of the new publicly traded entity,
Skibo Financial Corp.

The  reorganization  was  accounted  for in a manner  similar  to a  pooling  of
interests.  Accordingly,  the prior years' consolidated  financial statements of
the  Company  are  identical  to  the  prior  periods'  consolidated   financial
statements of First Carnegie Deposit.

NOTE 2 -  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 is a special purpose  subsidiary
that was formed for the issuance of collateralized mortgage obligations.

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

The results of  operations  for the three months and nine months ended  December
31, 1999 are not  necessarily  indicative  of the results to be expected for the
year  ending  March 31, 2000 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,
1999.

NOTE 3 -  Reclassification of Prior Period's Statements
          ---------------------------------------------

Certain amounts reported in the prior period's consolidated financial statements
have been  reclassified to conform with the current period's  reporting  format.
The number of shares  and  related  earnings  per share  have been  restated  to
reflect the Company's  reorganized  structure  including a  three-for-two  stock
exchange completed on October 29, 1998.

NOTE 4 -  Dividends on Common Stock
          -------------------------

On December 9, 1999, 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 December 31, 1999. 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 remaining outstanding shares were paid on January 14, 2000. Any
waiver of  dividends  by the  M.H.C.  may result in 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 the effect of diluting the minority
stockholders of the Company. There can be no assurance that the Office of Thrift
Supervision ("OTS") will permit future dividend waivers, or of the terms of such
permitted waivers.

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 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.  Potentially dilutive common stock
equivalents  arise from the assumed  conversion of outstanding stock options and
unvested RSP shares.

                                       5
<PAGE>


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

<TABLE>
<CAPTION>
                                               Three Months Ended                             Nine months Ended
                                      December 31,            December 31,              December 31,             December 31,
                                      ------------            ------------              ------------             ------------
                                           1999                    1998                      1999                     1998
                                        ----------              ----------                ----------               ----------
<S>                                    <C>                     <C>                       <C>                      <C>
Basic EPS computation:
 Numerator-Net Income                   $  280,000              $  125,000                $  793,000               $  472,000
                                        ==========              ==========                ==========               ==========
 Denominator-Wt Avg common
shares outstanding                       3,282,193               3,350,617                 3,327,324                3,356,716
Basic EPS                               $      .09              $      .04                $      .24               $      .14
                                        ==========              ==========                ==========               ==========

Diluted EPS computation:
 Numerator-Net Income                      280,000                 125,000                   793,000                  472,000
                                        ==========              ==========                ==========               ==========
 Denominator-Wt Avg
   common shares outstanding             3,282,193               3,350,617                 3,327,324                3,356,716
 Dilutive Stock Options                         --                  21,973                        --                    7,324
 Dilutive Unvested RSP                          --                     332                        --                      111
                                        ----------              ----------                ----------               ----------
 Weighted avg common
shares          and common stock
    equivalents                          3,282,193               3,372,922                 3,327,324                3,364,151
Diluted EPS                             $      .09              $      .04                $      .24               $      .14
                                        ==========              ==========                ==========               ==========
</TABLE>


For both the three and nine month  periods  ended  December  31,  1999 and 1998,
30,946 and 0 RSP shares and 155,246 and 77,619 Option shares, respectively, were
excluded from the diluted EPS  computation  due to their  anti-dilutive  effect.
Shares  outstanding  for the three and nine months  ended  December 31, 1999 and
1998 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 47,046 and 75,135 at
December 31, 1999 and 1998, respectively.


NOTE 6 -  Comprehensive Income
          --------------------

For the three  months  ended  December 31, 1999 and 1998,  the  Company's  total
comprehensive income was $280,000 and $125,000,  respectively,  and $793,000 and
$472,000,  respectively,  for the nine months ended  December 31, 1999 and 1998.
Total  comprehensive  income is comprised of net income and other  comprehensive
income. For both three and nine month periods,  there was no other comprehensive
income.

NOTE 7 -  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 $155,500,000 at December 31, 1999, are reflective
of an increase of $444,000 or .3% as compared to $155,056,000 at March 31, 1999.
The increase in total assets was primarily  due to increases in  investment  and
mortgage-backed securities,  prepaid expenses and other assets, partially offset
by  decreases  in loans  receivable  as well as assets  used to  repurchase  the
Company's common stock.

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

Loans  Receivable,  net.  Net loans  receivable  at December  31,  1999  totaled
$57,695,000,  a decrease of $7,614,000 or 11.7%,  as compared to  $65,309,000 at
March 31, 1999. The decrease was primarily due to principal  repayments totaling
$11.5 million,  offset by  originations  of $548,000,  which  includes  $212,000
consumer  loans,  and  purchases of $3.4  million.  The Company  purchased  $2.4
million one -to  four-family  and $247,000 farm  mortgages in its normal lending
area.  The Company also  purchased  $94,000  government-guaranteed  multi-family
project   loans,   $147,000   farm   mortgages  and  $442,000   Small   Business
Administration  (SBA)  loans  outside  its normal  lending  area,  primarily  in
Pennsylvania.

Mortgage-backed  Securities.  Mortgage-backed  securities  were  $60,234,000  at
December  31,  1999,  an  increase  of  $5,869,000  or  10.8%,  as  compared  to
$54,365,000  at March 31,  1999.  The  increase  was due to  purchases  of $17.3
million, offset by principal repayments and maturities totaling $11.3 million.

Investment Securities. Investment securities totaled $26,701,000 at December 31,
1999, an increase of $1,614,000 or 6.4%, as compared to $25,087,000 at March 31,
1999.  This was  primarily a result of purchases of $5.4 million of U.S.  Agency
securities,  offset by the proceeds from maturities, calls and payments totaling
$3.8 million.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing   deposits,  totaled  $2,562,000,  an
increase of $63,000 or 2.5% from the prior quarter.  This increase was primarily
due to increased  interest-bearing  deposits maintained at the Federal Home Loan
Bank ("FHLB"),  offset by decreased  non-interest bearing deposits maintained at
the Federal Reserve Bank of Cleveland.

Deposits. Total deposits, after interest credited, decreased by $806,000 or 1.0%
to  $76,111,000  at December 31, 1999, as compared to  $76,917,000  at March 31,
1999. The decrease was primarily due to a decrease in  certificates  of deposit,
Money Market and passbook accounts.

FHLB Advances.  FHLB advances,  at December 31, 1999,  totaled  $52,300,000,  an
increase of $3.0 million or 6.1%, as compared to  $49,300,000 at March 31, 1999.
The Company uses FHLB  advances as a supplement to deposits to fund its purchase
of loans and investments.

Stockholders'  Equity.  Stockholders' equity totaled $25,018,000 at December 31,
1999, as compared to  $25,130,000 at March 31, 1999. The decrease of $112,000 or
 .4% was primarily due to the purchase of 127,465  shares of treasury stock at an
average  cost of $6.75 per  share,  partially  offset by  earnings  for the nine
months ended December 31, 1999. The Company has received  regulatory approval to
purchase  up to 10% of the shares of common  stock  held by  persons  other than
Skibo  Bancshares,  M.H.C.  Any future  purchases  will  decrease  stockholders'
equity.
                                       7
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION

Results of Operations for the Three Months Ended December 31, 1999 and 1998

Net Income.  The Company  recorded  net income of $280,000  for the three months
ended  December  31,  1999,  as compared to net income of $125,000 for the three
months ended  December 31, 1998.  The $155,000 or 124.0%  increase in net income
for the three months  ended  December  31, 1999 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  $103,000 or 11.0% for the
three  months ended  December  31,  1999,  as compared to the three month period
ended  December 31,  1998.  The  increase  was  primarily  due to a $6.6 million
increase in average  interest-earning assets and a 7 basis point increase in the
average  yield  earned  thereon.   The  average   balance  of   interest-bearing
liabilities  increased by $7.1 million or 5.9% with a 16 basis point decrease in
the average rate paid thereon.

The 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 2.07% for the three month period ended December 31, 1999 from 1.84%
for the three month period ended December 31, 1998. The increase in the interest
rate spread was  primarily  the result of decreases in the interest  paid on the
average  balance of  certificates  of deposits,  which renewed at lower rates of
interest

Interest Income.  Interest income  increased  $138,000 or 5.7% to $2,539,000 for
the three month period ended  December 31, 1999, as compared to  $2,401,000  for
the three month period ended December 31, 1998.

Interest on loans  receivable  decreased  $102,000 or 8.9% for the three  months
ended  December 31, 1999,  as compared to the three month period ended  December
31, 1998.  This decrease was primarily the result of a $5.0 million  decrease in
the average  balance of loans  receivable  and an 8 basis point  decrease in the
average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $165,000 or 19.9% for
the three months ended  December 31, 1999, as compared to the three months ended
December 31, 1998.  This  increase was  primarily  the result of an $8.9 million
increase in the average balance of such securities and a 15 basis point increase
in the average yield earned thereon.

Interest income on investment  securities increased by $106,000 or 32.0% for the
three  months ended  December  31,  1999,  as compared to the three months ended
December 31, 1998. The increase in interest income on investment  securities was
primarily due to a $4.3 million higher average balance of such securities, and a
64 basis point increase in the average yield earned thereon.

Interest income on other  interest-earning  assets decreased by $31,000 or 33.3%
for the three  months ended  December 31, 1999,  as compared to the three months
ended  December 31,  1998.  The  decrease  was  primarily  due to a $1.6 million
decrease in the average interest-earning assets at the FHLB and a 59 basis point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 6.78%
and 6.71 % for the  three  month  periods  ended  December  31,  1999 and  1998,
respectively.

Interest Expense. Interest expense totaled $1,497,000 for the three months ended
December 31, 1999, as compared to $1,462,000 for the three months ended December
31, 1998.  The $35,000 or 2.4%  increase was primarily due to an increase in the
average balances of FHLB advances, offset by decreases in the average balance of
savings, bonds payable and other borrowings and a 16 basis point decrease in the
average rate paid on the total average interest-bearing liabilities.

Interest expense on deposits  (including  escrows) decreased $51,000 or 5.9% for
the three months ended  December 31, 1999, as compared to the three months ended
December 31, 1998.  The decrease was primarily due to a 22 basis point  decrease
in the average rate paid thereon.

Interest on FHLB advances increased $135,000 or 24.6% for the three months ended
December 31, 1999, as compared to the three months ended  December 31, 1998. The
increase was primarily due to a $9.8 million  increase in the average balance of
advances and a 6 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 and other  borrowings,  a less significant  portion of
interest  expense,  decreased  by $49,000 or 100.0%,  as the  average  principal
amount of other  borrowings  decreased  by $1.9  million,  primarily  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  December 31,
1999 and 1998, the Company established  provisions for loan losses of $1,000 and
$5,000,  respectively.  This reflected management's evaluation of the underlying
credit risk of the loan portfolio and the level of allowance for loan losses.

At December 31, 1999, the allowance for loan losses totaled $578,000 or .99% and
672.1% of total loans and total non-performing loans, respectively,  as compared
to $575,000 or .88% and 70.3%,  respectively,  at March 31, 1999.  The Company's
non-performing  loans  (non-accrual  loans  and  accruing  loans 90 days or more
overdue)  totaled  $86,000 and  $818,000 at December 31, 1999 and March 31, 1999
respectively,  which  represented  0.1% and 1.3% of the  Company's  total loans,
respectively.  The  non-performing  loans at March 31,  1999,  included two Farm
Service Agency (FSA) guaranteed loans in the amount of $618,000,  which have now
been paid off. The Company's ratio of  non-performing  loans to total assets was
 .06% and .53% at December 31, 1999 and March 31, 1999, respectively.

Other  Income.  During the three  months ended  December 31, 1999,  other income
increased  $5,000 or 29.4%,  as compared to the three months ended  December 31,
1998.

Other Expenses.  Total other expenses  decreased by $132,000 or 18.1% during the
three  months ended  December  31,  1999,  as compared to the three months ended
December 31,  1998.  The decrease  was  primarily  attributable  to decreases of
$98,000 or 17.1% in compensation and employee  benefits expense primarily due to
reduced  expense of stock benefit plans,  and $32,000 or 34.4% in other expenses
primarily due to decreases in legal and professional services expenses.

Income Tax Expense.  The provision for income tax totaled $184,000 for the three
months  ended  December  31,  1999,  as compared to $95,000 for the three months
ended  December  31,  1998.  The $89,000 or 93.7%  increase was due to increased
taxable income.

Results of Operations for the Nine Months Ended December 31, 1999 and 1998

Net Income.  The  Company  recorded  net income of $793,000  for the nine months
ended  December  31,  1999,  as compared to net income of $472,000  for the nine
months ended December 31, 1998. The $321,000 or 68.0% increase in net income for
the nine months ended December 31, 1999 was primarily the result of increases in
net interest  income and  decreases in other  expenses  and  provision  for loan
losses,  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 $237,000 or 8.3% for the nine
months  ended  December  31,  1999,  as compared to the nine month  period ended
December 31, 1998. The increase was primarily due to a $7.7 million  increase in
average  interest-earning  assets,  offset by a 9 basis  point  decrease  in the
average  yield  earned  thereon.   The  average   balance  of   interest-bearing
liabilities  increased by $8.3 million,  offset by a 26 basis point  decrease in
the average rate paid thereon.

The  interest  rate spread  increased  to 2.03% for the nine month  period ended
December 31, 1999 from 1.86% for the nine month period ended  December 31, 1998.
The increase in the interest  rate spread was  primarily the result of decreases
in the average  interest paid on the average balance of certificates of deposits
and FHLB advances.  Maturing  certificates  of deposit renewed at lower rates of
interest,  and as FHLB  advances  matured,  they were  replaced with advances at
lower rates of interest.

Interest Income.  Interest income  increased  $296,000 or 4.1% to $7,541,000 for
the nine month period ended December 31, 1999, as compared to $7,245,000 for the
nine month period ended December 31, 1998.

Interest  on loans  receivable  decreased  $307,000  or 8.6% for the nine months
ended December 31, 1999, as compared to the nine month period ended December 31,
1998.  This decrease was primarily the result of a $6.0 million  decrease in the
average balance of loans  receivable , offset by a 3 basis point increase in the
average yield earned thereon.

Interest income on mortgage-backed securities increased $176,000 or 6.9% for the
nine months  ended  December  31,  1999,  as  compared to the nine months  ended
December 31, 1998.  This  increase  was  primarily  the result of a $5.8 million
increase in the average balance of such  securities,  offset by a 27 basis point
decrease in the average yield earned thereon.

Interest  income on investment  securities  increased  $424,000 or 50.0% for the
nine months  ended  December  31,  1999,  as  compared to the nine months  ended
December 31, 1998. The increase in interest income on investment  securities was
primarily  due  to a $8.1  million  increase  in the  average  balance  of  such
securities and an increase in the average yield of 18 basis points.

Interest income on other interest-earning assets increased by $3,000 or 1.1% for
the nine months ended  December  31, 1999,  as compared to the nine months ended
December 31, 1998.  The increase was primarily due a 26 basis point  increase in
the average yield earned thereon,  offset by a $208,000  decrease in the average
interest-earning deposits at other financial institutions

                                       9
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION


The average yield on the average  balance of  interest-earning  assets was 6.73%
and  6.82%  for the nine  month  periods  ended  December  31,  1999  and  1998,
respectively.

Interest Expense.  Interest expense totaled $4,455,000 for the nine months ended
December 31, 1999, as compared to $4,396,000  for the nine months ended December
31, 1998.  The $59,000 or 1.3%  increase was primarily due to an increase in the
average  balance of FHLB  advances,  offset by  decreased  average  balances  in
savings  deposits,  bonds  payable  and other  borrowings  and a 26 basis  point
decrease  in the  average  rate  paid  on  the  total  average  interest-bearing
liabilities.

Interest expense on deposits  (including escrows) decreased $169,000 or 6.5% for
the nine months ended  December  31, 1999,  as compared to the nine months ended
December 31, 1998.  The decrease was primarily due to a 29 basis point  decrease
in the average rate paid thereon.

Interest on FHLB advances  increased $320,000 or 19.7% for the nine months ended
December 31, 1999, as compared to the nine months ended  December 31, 1998.  The
increase was primarily due to a $9.8 million  increase in the average balance of
advances,  offset  by a 19 basis  point  decrease  in the  average  rate paid on
advances.

Interest on bonds payable and other  borrowings,  a less significant  portion of
interest expense, decreased by $92,000 or 59.4%, as the average principal amount
of other borrowings decreased by $1.4 million, primarily due to the repayment of
the bond in its entirety.

Provision for Loan Losses. During the nine month periods ended December 31, 1999
and 1998,  the  Company  established  provisions  for loan  losses of $3,000 and
$20,000, 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 nine months ended  December  31,  1999,  other income
increased  $5,000 or 7.6%,  as compared to the nine months  ended  December  31,
1998.

Other Expenses.  Total other expenses  decreased by $226,000 or 10.8% during the
nine months  ended  December  31,  1999,  as  compared to the nine months  ended
December  31,  1998.  The decrease  was  primarily  attributable  to an $181,000
decrease in  compensation  and  employees  benefit  expense and $39,000 in other
expenses.  The decrease in compensation and employees benefit expense was due to
decreases of $185,000 in RSP expense due to the  implementation of a stockholder
approved  restricted  stock  plan  (RSP) in the prior  period,  $52,000  in ESOP
expense  due to the fair  market  value of the stock,  and  $40,000 in  employee
benefits expense primarily due to a change in hospitalization  coverage,  offset
by an increase of $75,000 in Pension Plan,  Supplemental  Employee  Pension Plan
(SERP) and Director's  Retirement  Plan (DRP) costs and $21,000 in  compensation
expense.

Income Tax Expense.  The provision for income tax totaled  $499,000 for the nine
months  ended  December  31,  1999,  as compared to $335,000 for the nine months
ended  December  31, 1998.  The $164,000 or 49.0%  increase was due to increased
taxable 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 151.37%  and  129.98%,  at December  31, 1999 and March 31,
1999, 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 December 31, 1999, the Bank was in compliance with its
three regulatory capital requirements as follows:

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

Tangible capital                       $24,166         15.57%
Tangible capital requirement             2,327          1.50%
                                       -------         -----
Excess over requirement                $21,839         14.07%
                                       =======         =====

Core capital                           $24,166         15.57%
Core capital requirement                 4,655          3.00%
                                       -------         -----
Excess over requirement                $19,511         12.57%
                                       =======         =====

Risk based capital                     $24,744         52.73%
Risk based capital requirement           3,754          8.00%
                                       -------         -----
Excess over requirement                $20,990         44.73%
                                       =======         =====


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.


Year 2000 Compliance Issues

Like many financial  institutions,  we rely on computers to conduct our business
and  information  systems  processing.  Industry  experts were concerned that on
January 1, 2000,  some  computers  might not be able to  interpret  the new year
properly,  causing computer  malfunctions.  Some banking industry experts remain
concerned that some computers may not be able to interpret  additional  dates in
the year 2000  properly.  We have operated and evaluated our computer  operating
systems  following  January  1,  2000 and  have not  identified  any  errors  or
experienced  any computer system  malfunctions.  We will continue to monitor our
information systems to assess whether our systems are at risk of misinterpreting
any future dates and will develop  appropriate  contingency plans to prevent any
potential system malfunction or correct any system failures. The Company has not
been informed of any such problem  experienced  by its vendors or its customers,
nor by any of the municipal agencies that provide services to the Company.

Nevertheless,  it is too soon to  conclude  that there will not be any  problems
arising  form the  Year  2000  problem,  particularly  at some of the  Company's
vendors.  The Company will continue to monitor its significant  vendors of goods
and services  with  respect to Year 2000  problems  they may  encounter as those
issues  may effect  the  Company's  ability  to  continue  operations,  or might
adversely  affect the Company's  financial  position,  results of operations and
cash  flows.  The  Company  does not  believe at this time that these  potential
problems  will  materially  impact the ability of the  Company to  continue  its
operations, however, no assurance can be given that this will be the case.

The  expectations  of the  Company  contained  in this  section on Year 2000 are
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995 and involve  substantial  risks and uncertainties
that may cause actual results to differ  materially  from those indicated by the
forward-looking  statements.  All forward-looking statements in this section are
based on information available to the Company on the date of this document,  and
the Company assumes no obligation to update such forward-looking statements.


                                     11
<PAGE>

                          PART II - OTHER INFORMATION


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

    The Company was not engaged in any legal  proceeding of a material nature at
    December  31,  1999.  From time to time,  the  Company is a party to routine
    legal  proceedings  in the ordinary  course of  business,  such as claims to
    enforce liens,  condemnation  proceedings on properties in which the Company
    holds security  interest,  claims involving the making and servicing of real
    property  loans,  and other issues  incident to the business of the Company.
    There were no  lawsuits  pending  or known to be  contemplated  against  the
    Company at  December  31,  1999 that  would  have a  material  effect on the
    operations or income of 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)   No reports on Form 8-K were filed  during the third  quarter of fiscal
          2000, however, on January 28, 2000, the Company filed a Current Report
          on Form 8-K reporting a change in its auditors.

                                       12
<PAGE>


                                   SIGNATURES

          In  accordance  with  the   requirements  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

<TABLE>
<CAPTION>
                                                         SKIBO FINANCIAL CORP.


<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
(Duly Authorized Representative)                         (Principal Financial and Accounting Officer)

Date: February 4, 2000                                   Date: February 4, 2000

</TABLE>


                                       13