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, 2002
                               -----------------

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

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

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

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

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

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

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


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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

                  Number of shares outstanding of common stock
                             as of January 30, 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
               December 31, 2002 (unaudited) and March 31, 2002................1

               Consolidated Statements of Income for the three and
                    nine months ended December 31, 2002 and 2001 (unaudited))..2

               Consolidated Statement of Stockholders' Equity for the
               nine months ended December 31, 2002 (unaudited).................3

               Consolidated Statements of Cash Flows for the nine
               months ended December 31, 2002 and 2001 (unaudited))............4

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


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


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


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


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


Signatures


                                        2

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                   December 31,  March 31,
                                                                       2002        2002
                                                                    ---------    ---------
                    ASSETS                                         (Unaudited)
                    ------
<S>                                                               <C>          <C>
Cash and amounts due from depository institutions                   $     518    $     530
Interest-bearing deposits with other institutions                       4,894        4,047
Investment securities:
     Held-to-maturity (market value $10,041 and $17,184)                9,875       17,421
Mortgage-backed securities:
     Held-to-maturity (market value $93,591 and $79,120)               91,502       78,064
Loans receivable, net                                                  40,254       45,865
Real estate owned, net                                                     28         --
Accrued interest receivable:
     Investment securities                                                 75          215
     Mortgage-backed securities                                           506          502
     Loans receivable                                                     355          423
Federal Home Loan Bank stock, at cost                                   2,742        2,400
Premises and equipment, net                                               516          531
Prepaid expenses and other assets                                       5,326        5,120
                                                                    ---------    ---------
        Total Assets                                                $ 156,591    $ 155,118
                                                                    =========    =========

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

Liabilities:
     Deposits                                                       $  80,762    $  78,520
     Federal Home Loan Bank advances                                   48,000       48,000
     Advances from borrowers for taxes and insurance                       57          117
     Accrued expenses and other liabilities                             4,345        3,870
                                                                    ---------    ---------
        Total Liabilities                                             133,164      130,507

Stockholders' Equity:
     Preferred stock, 5,000,000 shares authorized; none issued             --           --
     Common stock, $0.10 par value; 10,000,000 shares authorized;
        3,449,974 shares issued                                           345          345
     Additional paid-in capital                                         9,777        9,778
     Treasury stock, at cost (308,470 shares at December 31, 2002
        and 320,423 shares at March 31, 2002)(1)                       (2,149)      (2,227)
     Unearned Restricted Stock Plan (RSP) shares                           --           (4)
     Retained earnings, substantially restricted                       15,454       16,719
                                                                    ---------    ---------
        Total Stockholders' Equity                                     23,427       24,611
                                                                    ---------    ---------
        Total Liabilities and Stockholders' Equity                  $ 156,591    $ 155,118
                                                                    =========    =========
</TABLE>

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

See accompanying notes to consolidated financial statements.

                                        1
<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                        Consolidated Statements of Income

         For the Three and Nine months Ended December 31, 2002 and 2001

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                      Three Months Ended         Nine Months Ended
                                                          December 31,              December 31,
                                                       2002         2001         2002         2001
                                                    ----------   ----------   ----------   ----------
                                                          (unaudited)               (unaudited)
<S>                                               <C>          <C>          <C>          <C>
Interest income:
     Loans receivable                               $      682   $      844   $    2,234   $    2,614
     Mortgage-backed securities                          1,119          998        3,345        2,932
     Investment securities                                 135          261          573        1,064
     Other                                                  36          105          102          366
                                                    ----------   ----------   ----------   ----------
            Total interest income                        1,972        2,208        6,254        6,976

Interest expense:
     Deposits                                              660          811        2,071        2,505
     Federal Home Loan Bank advances                       670          670        2,004        2,004
                                                    ----------   ----------   ----------   ----------
            Total interest expense                       1,330        1,481        4,075        4,509
                                                    ----------   ----------   ----------   ----------
            Net interest income                            642          727        2,179        2,467

Provision for loan losses                                   --           --           --           --
                                                    ----------   ----------   ----------   ----------
            Net interest income after
              provision for loan losses                    642          727        2,179        2,467

Other income:
     Fees and service charges                               23           11           51           31
     Other                                                  29           40           97           81
                                                    ----------   ----------   ----------   ----------
            Total other income                              52           51          148          112

Other expenses:
     Compensation and employee benefits                    552          488        1,622        1,589
     Premises and occupancy costs                           44           48          136          145
     Federal insurance premiums                              3            3           10           10
     Other operating expenses                               60           71          210          211
                                                    ----------   ----------   ----------   ----------
            Total other expenses                           659          610        1,978        1,955
                                                    ----------   ----------   ----------   ----------
                Income before income taxes                  35          168          349          624

Provision for income taxes                                  17           15          118          174
                                                    ----------   ----------   ----------   ----------
            Net income                                      18          153          231          450

Other comprehensive income:
     Unrealized gain on securities available-for-
       sale, net of tax                                     --           --           --           --
                                                    ----------   ----------   ----------   ----------
            Total comprehensive income              $       18   $      153   $      231   $      450
                                                    ==========   ==========   ==========   ==========

Basic earnings per share                            $      .01   $      .05   $      .07   $      .14
Diluted earnings per share                          $      .01   $      .05   $      .07   $      .14

Weighted average shares outstanding - Basic          3,143,673    3,131,622    3,141,231    3,131,963
Weighted average shares outstanding - Diluted        3,212,120    3,194,080    3,212,434    3,179,498
</TABLE>

See accompanying notes to consolidated financial statements.

                                        2
<PAGE>

                                 SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                             Consolidated Statement of Stockholders' Equity

                         For the Nine months Ended December 31, 2002 (unaudited)

                          (Dollar amounts in thousands, except per share data)


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

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

Cash dividends declared, net
  ($.36 per share regular,
   $.84 per share special)            --             --          --         --        (1,496)   (1,496)

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

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

Options Exercised (12,711 shares)     --            (1)          88         --            --        87

Net income                            --             --          --         --           231       231
                                  ------         ------    --------     ------       -------   -------

Balance at December 31, 2002      $  345         $9,777    $ (2,149)    $   --       $15,454   $23,427
                                  ======         ======    ========     ======       =======   =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                        3

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

              For the Nine months Ended December 31, 2002 and 2001

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                     2002        2001
                                                                                   --------    --------
                                                                                       (unaudited)
<S>                                                                              <C>         <C>
Operating activities:
     Net income                                                                    $    231    $    450
     Adjustments to reconcile net income to net cash
        provided by operating activities:
           Depreciation                                                                  37          48
           Compensation expense-Employee Stock Ownership Plan ("ESOP")
              and RSP                                                                     4         196
           Net accretion of premiums and discounts                                     (104)       (227)
           Decrease in accrued interest receivable                                      204         322
           Increase in prepaid expenses                                                (206)       (345)
           Decrease in accrued interest payable                                        (222)       (150)
           Increase (decrease) in accrued income taxes                                  173        (190)
           Other, net                                                                   507         516
                                                                                   --------    --------
               Net cash provided by operating activities                                624         620
                                                                                   --------    --------
Investing activities:
     Purchases of premises and equipment                                                (22)         (9)
     Purchases of investment securities held-to-maturity                             (3,116)     (8,600)
     Purchases of mortgage-backed securities held-to-maturity                       (34,075)    (31,784)
     Proceeds from maturities/calls and principal repayments of:
        Investment securities held-to-maturity                                       10,664      16,780
        Mortgage-backed securities held-to-maturity                                  20,672      17,127
     Loans purchased                                                                 (4,475)    (10,875)
     Net principal repayments on loans                                               10,142      12,123
     Increase in Federal Home Loan Bank stock                                          (342)         --
                                                                                   --------    --------
                Net cash used in investing activities                                  (552)     (5,238)
                                                                                   --------    --------

Financing activities:
     Net increase in deposits                                                         2,242       4,351
     Net decrease in mortgage escrow                                                    (60)        (41)
     Treasury stock purchased                                                           (10)       (140)
     Options exercised, net                                                              87          --
     Cash dividends paid                                                             (1,496)       (972)
                                                                                   --------    --------
               Net cash provided by financing activities                                763       3,198
                                                                                   --------    --------

Net increase (decrease) in cash and cash equivalents                                    835      (1,420)
Cash and cash equivalents, beginning of period                                        4,577       9,212
                                                                                   --------    --------
Cash and cash equivalents, end of period                                           $  5,412    $  7,792
                                                                                   ========    ========

Supplemental  disclosures of cash flow information:
  Cash paid during the period for:
        Interest                                                                   $  4,297    $  4,658
                                                                                   ========    ========
        Income taxes                                                               $    136    $    357
                                                                                   ========    ========
       Noncash investing activities:
            Loans transferred to real estate owned                                 $     28    $     --
                                                                                   ========    ========
</TABLE>

See accompanying notes to consolidated financial statements

                                        4
<PAGE>

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



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

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

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

The results of  operations  for the three months and nine months ended  December
31, 2002 are not  necessarily  indicative  of the results to be expected for the
year  ending  March 31, 2003 or any other  period.  The  unaudited  consolidated
financial  statements and notes thereto  should be read in conjunction  with the
audited  financial  statements  and notes  thereto  for the year ended March 31,
2002.

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

On October 22, 2002, the Board of Directors of the Company  declared a $0.20 per
share special cash dividend on the Company's outstanding shares of common stock,
payable to  stockholders  of record as of  November 4, 2002.  Skibo  Bancshares,
M.H.C.  (the "M.H.C.") waived the receipt of dividends on its 1,897,500  shares.
The cash  dividends  on the  outstanding  shares held by persons  other than the
M.H.C.  were paid on November  15,  2002.  On December  12,  2002,  the Board of
Directors of the Company  declared a $0.12 per share regular cash dividend and a
$0.20 per share  special cash dividend on the  Company's  outstanding  shares of
common stock,  payable to stockholders of record as of December 31, 2002.  Skibo
Bancshares,  M.H.C.  (the  "M.H.C.")  waived  the  receipt of  dividends  on its
1,897,500 shares.  The cash dividends on the outstanding  shares held by persons
other than the M.H.C.  were paid on January 15, 2003. Under current  regulations
of the Office of Thrift  Supervision (the "OTS"), any waiver of dividends by the
M.H.C.  will no longer cause an adjustment to the ratio pursuant to which shares
of Company  common stock are  exchanged  for shares of a stock  holding  company
should the M.H.C. convert from the mutual to stock form of organization. Such an
adjustment  would have had the effect of diluting the minority  stockholders  of
the Company.

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

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

For the three  months  ended  December 31, 2002 and 2001,  the  Company's  total
comprehensive  income was $18,000 and $153,000,  respectively,  and $231,000 and
$450,000,  respectively,  for the nine months ended  December 31, 2002 and 2001.
Total  comprehensive  income is comprised of net income and other  comprehensive
income.  For both three and nine month periods ended December 31, 2002 and 2001,
there was no other comprehensive income.

NOTE 4 -  Earnings Per Share (EPS)
          ------------------------

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

                                        5
<PAGE>

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


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

<TABLE>
<CAPTION>
                                 Three Months Ended             Nine Months Ended
                              ---------------------------   ---------------------------

                              December 31,   December 31,   December 31,   December 31,
                                 2002            2001          2002           2001
                              ----------      ----------    ----------     ----------
<S>                         <C>             <C>           <C>            <C>
Basic EPS computation:
 Numerator-Net Income         $   18,000      $  153,000    $  231,000     $  450,000
 Denominator-Wt Avg common
 shares outstanding            3,143,673       3,131,622     3,141,231      3,131,963
Basic EPS                     $      .01      $      .05    $      .07     $      .14
                              ==========      ==========    ==========     ==========

Diluted EPS computation:
 Numerator-Net Income         $   18,000      $  153,000    $  231,000     $  450,000
 Denominator-Wt Avg
   common shares outstanding   3,143,673       3,131,622     3,141,231      3,131,963
 Dilutive Stock Options           68,447          57,339        71,203         44,925
 Dilutive Unvested RSP                --           5,119            --          2,610
                              ----------      ----------    ----------     ----------
 Weighted avg common shares
  and common stock
    equivalents                3,212,120       3,194,080     3,212,434      3,179,498
Diluted EPS                   $      .01      $      .05    $      .07     $      .14
                              ==========      ==========    ==========     ==========
</TABLE>


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

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

                                        6

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

General

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

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

Changes in Financial Condition

The Company's  total assets of $156,591,000 at December 31, 2002, are reflective
of an increase of $1,473,000 or 0.9%, as compared to  $155,118,000  at March 31,
2002.   The  increase  in  total  assets  was  primarily  due  to  increases  in
mortgage-backed securities, prepaid expenses and other assets,  interest-bearing
deposits with other institutions,  and FHLB stock, partially offset by decreases
in loans receivable, investment securities, and accrued interest receivable.

The  increase  in the  Company's  liabilities  was due to  increases  in savings
deposits  and accrued  expenses  and other  liabilities,  offset by decreases in
escrows.  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  $5,412,000,  an
increase of $835,000 or 18.2% as compared to $4,577,000 at March 31, 2002.

Investment Securities.  Investment securities totaled $9,875,000 at December 31,
2002, a decrease of $7,546,000 or 43.3%, as compared to $17,421,000 at March 31,
2002.  This was  primarily  a result  of  proceeds  from  maturities,  calls and
repayments  totaling $10.7 million,  offset by purchases of $3.1 million of U.S.
Agency securities.

Mortgage-backed  Securities.  Mortgage-backed  securities  were  $91,502,000  at
December  31,  2002,  an  increase  of  $13,438,000  or 17.2%,  as  compared  to
$78,064,000  at March 31,  2002.  The  increase  was due to  purchases  of $34.1
million, offset by principal repayments and maturities totaling $20.7 million.

Loans  Receivable,  net.  Net loans  receivable  at December  31,  2002  totaled
$40,254,000,  a decrease of $5,611,000 or 12.2%,  as compared to  $45,865,000 at
March 31, 2002. The decrease was primarily due to principal  repayments totaling
$10.5 million,  offset by originations of $316,000,  which consisted entirely of
consumer  loans,  and  purchases of $4.5  million.  The Company  purchased  $2.6
million conventional one -to four-family mortgage loans and $1.3 million insured
Federal Housing Administration  ("FHA") and Veterans  Administration ("VA") one-
to  four-family  mortgage loans within its normal lending area. The Company also
purchased  $461,000 United States  Department of Agriculture  ("USDA")  mortgage
loans  and  $104,000   Government   National   Mortgage   Association   ("GNMA")
multi-family project loans primarily outside its normal lending area.

Deposits. Total deposits, after interest credited,  increased by $2.2 million or
2.9% to  $80,762,000  at December 31, 2002, as compared to  $78,520,000 at March
31, 2002. The increase was due to increases in certificates of deposit, passbook
and  Money  Market  accounts,   offset  by  decreases  in  interest-bearing  and
noninterest-bearing checking accounts.

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

Stockholders'  Equity.  Stockholders' equity totaled $23,427,000 at December 31,
2002, as compared to $24,611,000 at March 31, 2002. The decrease of $1.2 million
or 4.8% was primarily due to the payment of three $0.12 regular cash  dividends,
one $0.14 special cash  dividend,  one $0.30 special cash dividend and two $0.20
special cash dividends,  partially  offset by earnings for the nine months ended
December 31, 2002.
                                        7
<PAGE>

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


Results of Operations for the Three Months Ended December 31, 2002 and 2001

Net Income.  The  Company  recorded  net income of $18,000 for the three  months
ended  December  31,  2002,  as compared to net income of $153,000 for the three
months ended December 31, 2001. The $135,000 or 88.2% decrease in net income for
the three  months  ended  December  31, 2002 was the result of a decrease in net
interest  income and increases in other expenses and provision for income taxes,
partially  offset by an increase in other income.  Changes in the  components of
income and expense are discussed herein.

Net Interest  Income.  Net interest  income  decreased  $85,000 or 11.7% for the
three  months ended  December  31,  2002,  as compared to the three month period
ended December 31, 2001. Although the average balance of interest-earning assets
increased $2.4 million or 1.6%,  the average yield earned  thereon  decreased 73
basis points.  The average balance of interest-  bearing  liabilities  increased
$3.2 million or 2.6%, however,  the average rate paid thereon decreased 59 basis
points.

The net  interest  rate  spread,  which is the  difference  between the yield on
average  interest-earning  assets  and  the  cost  of  average  interest-bearing
liabilities,  decreased to 1.10% for the three month  period ended  December 31,
2002 from 1.24% for the three month period ended December 31, 2001. The decrease
in the net interest rate spread was primarily the result of decreased  yields on
the average balances of interest  earning assets,  partially offset by decreased
rates paid on the average balance of savings deposits.

Interest Income.  Interest income decreased  $236,000 or 10.7% to $1,972,000 for
the three month period ended  December 31, 2002, as compared to  $2,208,000  for
the three month period ended December 31, 2001.

Interest on loans  receivable  decreased  $162,000 or 19.2% for the three months
ended  December 31, 2002,  as compared to the three month period ended  December
31, 2001.  This decrease was primarily the result of a $6.6 million  decrease in
the average  balance of loans  receivable  and a 46 basis point  decrease in the
average yield earned thereon.

Interest income on  mortgage-backed  securities  increased $121,000 or 12.1% for
the three months ended  December 31, 2002, as compared to the three months ended
December 31, 2001.  This  increase was  primarily  the result of a $22.0 million
increase in the average balance of  mortgage-backed  securities,  offset by a 93
basis point decrease in the average yield earned thereon.

Interest  income on investment  securities  decreased  $126,000 or 48.3% for the
three  months ended  December  31,  2002,  as compared to the three months ended
December 31, 2001. The decrease in interest income on investment  securities was
primarily  due  to a $6.7  million  decrease  in the  average  balance  of  such
securities and a 95 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning  assets decreased $69,000 or 65.7% for
the three months ended  December 31, 2002, as compared to the three months ended
December 31, 2001. The decrease was primarily due to a $6.4 million  decrease in
the  average  balance of other  interest-earning  assets  and a 111 basis  point
decrease in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 5.29%
and 6.02 % for the  three  month  periods  ended  December  31,  2002 and  2001,
respectively.

Interest Expense. Interest expense totaled $1,330,000 for the three months ended
December 31, 2002, as compared to $1,481,000 for the three months ended December
31, 2001. Although the average balance of interest-bearing liabilities increased
$3.2 million, the average rate paid thereon decreased 59 basis points, resulting
in a $151,000 or 10.2% decrease in interest expense.

Interest expense on deposits (including escrows) decreased $151,000 or 18.6% for
the three months ended  December 31, 2002, as compared to the three months ended
December  31, 2001.  The  decrease  was due to a 93 basis point  decrease in the
average  rate paid  thereon,  offset by a $3.2  million  increase in the average
balance of deposits.

Interest on FHLB  advances  totaled  $670,000 for both three month periods ended
December 31, 2002 and 2001.  The Company uses FHLB advances as a funding  source
to supplement deposits, which are the Company's primary source of funds.

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 December 31, 2002 and 2001.


                                        8
<PAGE>


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

At December 31, 2002, the allowance for loan losses totaled $425,000 or 1.0% and
494.2% of total loans and total non- performing loans, respectively, as compared
to $425,000 or 0.9% and 376.1%,  respectively,  at March 31, 2002. The Company's
non-performing  loans  (non-accrual  loans  and  accruing  loans 90 days or more
overdue)  totaled  $86,000 and $113,000 at December 31, 2002 and March 31, 2002,
respectively,  which  represented  0.21% and 0.24% of the Company's total loans,
respectively.  The Company's ratio of  non-performing  loans to total assets was
..05% and .07% at December 31, 2002 and March 31, 2002, respectively.

Other  Income.  During the three  months ended  December 31, 2002,  other income
increased  $1,000 or 2.0%,  as compared to the three months  ended  December 31,
2001.

Other  Expenses.  Total other  expenses  increased by $49,000 or 8.0% during the
three  months ended  December  31,  2002,  as compared to the three months ended
December 31, 2001.  The increase was  attributable  to an increase of $64,000 or
13.1% in  compensation  and employee  benefits  expense,  offset by decreases of
$4,000 or 8.3% in premises and  occupancy  costs,  and $11,000 or 15.5% in other
operating expenses

Income Tax Expense.  The provision  for income tax increased  $2,000 or 13.3% to
$17,000 for the three months ended December 31, 2002, as compared to $15,000 for
the three months ended December 31, 2001.

Results of Operations for the Nine Months Ended December 31, 2002 and 2001

Net Income.  The  Company  recorded  net income of $231,000  for the nine months
ended  December  31,  2002,  as compared to net income of $450,000  for the nine
months ended December 31, 2001. The $219,000 or 48.7% decrease in net income for
the nine months ended December 31, 2002 was primarily the result of decreases in
net interest  income and increases in other  expenses,  offset by an increase in
other  income and a decrease  in  provision  for  income  taxes.  Changes in the
components of income and expense are discussed herein.

Net Interest  Income.  Net interest income  decreased  $288,000 or 11.7% for the
nine months ended  December 31, 2002, as compared to the nine month period ended
December  31,  2001.  Although the average  balance of  interest-earning  assets
increased $3.2 million or 2.2%,  the average yield earned  thereon  decreased 78
basis points. The average balance of interest- bearing liabilities  increased by
$3.7 million or 3.0%, however,  the average rate paid thereon decreased 60 basis
points.

The net interest rate spread decreased to 1.31% for the three month period ended
December 31, 2002 from 1.49% for the three month period ended December 31, 2001.
The  decrease  in the net  interest  rate  spread  was  primarily  the result of
decreased yields on the average  balances of interest earning assets,  partially
offset by decreased rates paid on the average balance of savings deposits.

Interest Income.  Interest income decreased  $722,000 or 10.3% to $6,254,000 for
the nine month period ended December 31, 2002, as compared to $6,976,000 for the
nine month period ended December 31, 2001.

Interest  on loans  receivable  decreased  $380,000 or 14.5% for the nine months
ended December 31, 2002, as compared to the nine month period ended December 31,
2001.  This decrease was primarily the result of a $5.1 million  decrease in the
average balance of loans receivable and a 34 basis point decrease in the average
yield earned thereon.

Interest income on  mortgage-backed  securities  increased $413,000 or 14.1% for
the nine months ended  December  31, 2002,  as compared to the nine months ended
December 31, 2001.  This  increase was  primarily  the result of a $23.3 million
increase in the average balance of mortgage-backed securities,  partially offset
by a 109 basis point decrease in the average yield earned thereon.

Interest  income on investment  securities  decreased  $491,000 or 46.1% for the
nine months  ended  December  31,  2002,  as  compared to the nine months  ended
December 31, 2001. The decrease in interest income on investment  securities was
primarily  due  to a $8.4  million  decrease  in the  average  balance  of  such
securities and an 87 basis point decrease in the average yield earned thereon.

Interest income on other interest-earning assets decreased $264,000 or 72.1% for
the nine months ended  December  31, 2002,  as compared to the nine months ended
December 31, 2001. The decrease was primarily due to a $6.6 million  decrease in
the  average  balance of other  interest-earning  assets  and a 159 basis  point
decrease in the average yield earned thereon. The average


                                        9
<PAGE>


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


yield on the average balance of interest-earning  assets was 5.61% and 6.39% for
the nine month periods ended December 31, 2002 and 2001, respectively.

Interest Expense.  Interest expense totaled $4,075,000 for the nine months ended
December 31, 2002, as compared to $4,509,000  for the nine months ended December
31, 2001. Although the average balance of interest-bearing liabilities increased
$3.7 million, the average rate paid thereon decreased 60 basis points, resulting
in a $434,000 or 9.6% decrease in interest expense. Interest expense on deposits
(including  escrows)  decreased  $434,000  or 17.3%  for the nine  months  ended
December  31,  2002,  as compared to the nine months  ended  December  31, 2001.
Although the average  balance of deposits  increased  $3.7 million,  the average
rate paid thereon decreased 95 basis points.

Interest on FHLB advances totaled $2.0 million for both nine month periods ended
December 31, 2002 and 2001.

Provision for Loan Losses. Based upon management's  evaluation of the underlying
credit risk of the loan  portfolio  and the level of allowance  for loan losses,
the Company  established  no  provision  for loan  losses  during the nine month
periods ended December 31, 2002 and 2001.

Other  Income.  During the nine months ended  December  31,  2002,  other income
increased  $36,000 or 32.1%,  as compared to the nine months ended  December 31,
2001. This increase  resulted from increased  income from deferred loan fees and
increases  in the  cash  surrender  values  of  insurance  policies  held on the
participants of the SERP and DRP.

Other  Expenses.  Total other  expenses  increased by $23,000 or 1.2% during the
nine months  ended  December  31,  2002,  as  compared to the nine months  ended
December 31, 2001.  The increase was  attributable  to an increase of $33,000 in
compensation  and employees  benefit  expense,  offset by decreases of $1,000 in
other  expenses,  and $9,000 in premises and  occupancy  costs.  The increase in
compensation  and employee  benefits expense was due to increases of $186,000 in
the Company's  defined  benefit plan, SERP and DRP costs due to a SERP amendment
made in  September  2001 and  $38,000  in  compensation  and  employee  benefits
expense,  offset by decreases of $124,000 in ESOP expense due to the  completion
of the ESOP awards on December 31,  2001,  and $67,000 in RSP expense due to the
completion of the ESP awards on April 16, 2002.

Income Tax Expense.  The provision for income tax totaled  $118,000 for the nine
months  ended  December  31,  2002,  as compared to $174,000 for the nine months
ended  December  31,  2001.  The $56,000 or 32.2%  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 December 31, 2002, the Bank was in compliance with its
three regulatory capital requirements as follows:


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

Tangible capital........................       $23,651          15.11%
Tangible capital requirement............         2,348           1.50
                                               -------          -----
Excess over requirement.................       $21,303          13.61%
                                               =======          =====

Core capital............................       $23,651          15.11%
Core capital requirement................         4,697           3.00
                                               -------          -----
Excess over requirement.................       $18,954          12.11%
                                               =======          =====

Risk based capital......................       $24,076          58.87%
Risk based capital requirement..........         3,272           8.00
                                               -------          -----
Excess over requirement.................       $20,804          50.87%
                                               =======          =====

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

                                       10
<PAGE>




                             CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Controls

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

                                       11
<PAGE>

                           PART II - OTHER INFORMATION


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

                In June 2000, the Company's  subsidiary  First Carnegie  Deposit
                and other third  parties  were  informed of an  impending  legal
                action regarding a previously  completed sale of foreclosed real
                estate. Although First Carnegie Deposit has not been served as a
                defendant in any lawsuit, the Company has notified its insurance
                carrier  of  this  potential  action.  At this  time  management
                believes  this  action,   if  commenced,   will  not  result  in
                significant loss to the Company.

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


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

                Not applicable.


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

                Not applicable.


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

                Not applicable.


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

                Not applicable.


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

                a)   Exhibit 99 Certification Pursuant to 18 U.S.C.ss.1350

                b)   Not applicable


                                       12
<PAGE>

                                   SIGNATURES

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



                                       SKIBO FINANCIAL CORP.


Date: January 30, 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)               Treasurer and Secretary
                                            (Principal Financial and Accounting Officer)

Date: January 30,  2003                     Date: January 30, 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: January 30, 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: January 30, 2003               /s/ Carol A. Gilbert
                                          --------------------------------------
                                          Carol A. Gilbert
                                          Chief Financial and Operating Officer,
                                          Treasurer and Secretary