SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)
[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934

For the quarterly period ended June 30, 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 July 19, 2002


$0.10 Par Value Common Stock                        3,140,633
----------------------------                    ------------------
        Class                                   Shares Outstanding

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

<PAGE>

                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                                  TABLE OF CONTENTS
                                                                           Page
                                                                           ----



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


Item 1.     Financial Statements


                  Consolidated Statements of Financial Condition (As of
                  June 30, 2002 (unaudited) and March 31, 2002).............. 1

                  Consolidated Statements of Income (For the three
                  months ended June 30, 2002 and 2001 (unaudited))........... 2

                  Consolidated Statement of Stockholders' Equity (For the
                  three months ended June 30, 2002 (unaudited)).............. 3

                  Consolidated Statements of Cash Flows (For the three
                  months ended June 30, 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



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


Item 1.     Legal Proceedings................................................10
Item 2.     Changes in Securities............................................10
Item 3.     Defaults Upon Senior Securities..................................10
Item 4.     Submission of Matters to a Vote of Security-Holders..............10
Item 5.     Other Information................................................10
Item 6.     Exhibits and Reports on Form 8-K.................................10


Signatures

<PAGE>


                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statements of Financial Condition

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                        June 30,    March 31,
                                                                                         2002         2002
                                                                                       ---------    ---------
              ASSETS                                                                   (Unaudited)
              ------

<S>                                                                                  <C>          <C>
Cash and amounts due from depository institutions                                      $     915    $     530
Interest-bearing deposits with other institutions                                          2,825        4,047
Investment securities:
         Held-to-maturity (market value $16,194 and $17,184)                              16,155       17,421
Mortgage-backed securities:
         Held-to-maturity (market value $82,039 and $79,120)                              80,512       78,064
Loans receivable, net                                                                     45,882       45,865
Accrued interest receivable:
         Investment securities                                                               136          215
         Mortgage-backed securities                                                          501          502
         Loans receivable                                                                    413          423
Federal Home Loan Bank stock, at cost                                                      2,435        2,400
Premises and equipment, net                                                                  517          531
Prepaid expenses and other assets                                                          5,167        5,120
                                                                                       ---------    ---------
                  Total Assets                                                         $ 155,458    $ 155,118
                                                                                       =========    =========

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

Liabilities:
         Deposits                                                                      $  78,715    $  78,520
         Federal Home Loan Bank advances                                                  48,000       48,000
         Advances from borrowers for taxes and insurance                                     113          117
         Accrued expenses and other liabilities                                            4,432        3,870
                                                                                       ---------    ---------
                  Total Liabilities                                                      131,260      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                                                        9,778        9,778
         Treasury stock, at cost (321,181 shares at June 30, 2002
            and 320,423 shares at March 31, 2002)(1)                                      (2,237)      (2,227)
         Unearned Restricted Stock Plan (RSP) shares                                          --           (4)
         Retained earnings, substantially restricted                                      16,312       16,719
                                                                                       ---------    ---------
                  Total Stockholders' Equity                                              24,198       24,611
                                                                                       ---------    ---------

                  Total Liabilities and Stockholders' Equity                           $ 155,458    $ 155,118
                                                                                       =========    =========
</TABLE>

(1)Included are shares held by the Bank's RSP  totaling  11,840 at June 30, 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 Months Ended June 30, 2002 and 2001

              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                           2002         2001
                                                                        ----------   ----------
                                                                             (Unaudited)
<S>                                                                            <C>          <C>
Interest income:
         Loans receivable                                               $      784   $      899
         Mortgage-backed securities                                          1,114          965
         Investment securities                                                 245          423
         Other                                                                  30          138
                                                                        ----------   ----------
            Total interest income                                            2,173        2,425

Interest expense:
         Deposits                                                              710          848
         Federal Home Loan Bank advances                                       663          663
                                                                        ----------   ----------
            Total interest expense                                           1,373        1,511
                                                                        ----------   ----------

            Net interest income                                                800          914

Provision for loan losses                                                       --           --
                                                                        ----------   ----------
            Net interest income after provision for loan losses                800          914

Other income:
         Fees and service charges                                               16           10
         Other                                                                  35           32
                                                                        ----------   ----------
            Total other income                                                  51           42

Other expenses:
         Compensation and employee benefits                                    536          596
         Premises and occupancy costs                                           49           48
         Federal insurance premiums                                              4            4
         Other operating expenses                                               76           85
                                                                        ----------   ----------
            Total other expenses                                               665          733
                                                                        ----------   ----------

     Income before income taxes                                                186          223

Provision for income taxes                                                      71           85
                                                                        ----------   ----------
            Net income                                                         115          138

Other comprehensive income:
         Unrealized gain on securities available-for-sale, net of tax           --           --
                                                                        ----------   ----------
            Total comprehensive income                                  $      115   $      138
                                                                        ==========   ==========

Basic earnings per share                                                $      .04   $      .04
Diluted earnings per share                                              $      .04   $      .04

Weighted average shares outstanding - Basic                              3,139,367    3,130,993
Weighted average shares outstanding - Diluted                            3,212,531    3,155,334

</TABLE>


 See accompanying notes to consolidated financial statements.

                                       2
<PAGE>


                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                 Consolidated Statement of Stockholders' Equity

              For the Three Months Ended June 30, 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
 ($.12 per share regular,
  $.30 per share special)                       --            --          --              --          (522)         (522)

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

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

Net income                                      --            --          --              --           115           115
                                        ---------------------------------------------------------------------------------

Balance at June 30, 2002                      $345        $9,778     $(2,237)           $ --       $16,312       $24,198
                                        =================================================================================
</TABLE>


  See accompanying notes to consolidated financial statements.

                                       3
<PAGE>



                     SKIBO FINANCIAL CORP. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                For the Three Months Ended June 30, 2002 and 2001

                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                     2002       2001
                                                                   --------   --------
                                                                       (Unaudited)
<S>                                                              <C>        <C>
Operating activities:
     Net income                                                    $   115    $   138
     Adjustments to reconcile net income to net cash
       (used in) provided by operating activities:
         Depreciation                                                   16         16
         Compensation expense-ESOP and RSP                               4         87
         Net accretion of premiums and discounts                       (22)       (49)
         Decrease in accrued interest receivable                        90        103
         Increase in prepaid expenses                                  (47)       (38)
         Increase in accrued interest payable                          119        130
         Increase in accrued income taxes                                1         54
         Other, net                                                    437        (20)
                                                                   -------    -------
            Net cash provided by operating activities                  713        421
                                                                   -------    -------
Investing activities:
     Purchases of premises and equipment                                (2)        (2)
     Purchases of investment securities held-to maturity              (300)      (131)
     Purchases of mortgage-backed securities held-to-maturity       (9,150)    (7,639)
     Proceeds from maturities/calls and principal repayments of:
         Investment securities held-to-maturity                      1,565      1,113
         Mortgage-backed securities held-to-maturity                 6,676      5,028
     Loans purchased                                                (2,476)    (3,292)
     Net principal repayments on loans                               2,513      3,601
     Increase in Federal Home Loan Bank stock                          (35)        --
                                                                   -------    -------
            Net cash used in investing activities                   (1,209)    (1,322)
                                                                   -------    -------
Financing activities:
     Net increase in savings deposits                                  195      1,666
     Net (decrease) increase in mortgage escrow                         (4)        31
     Treasury stock purchased                                          (10)       (45)
     Cash dividends paid                                              (522)      (362)
                                                                   -------    -------
            Net cash (used in) provided by financing activities       (341)     1,290
                                                                   -------    -------

Net (decrease) increase in cash and cash equivalents                  (837)       389
Cash and cash equivalents, beginning of period                       4,577      9,212
                                                                   -------    -------
Cash and cash equivalents, end of period                           $ 3,740    $ 9,601
                                                                   =======    =======

Supplemental disclosures of cash flow information:
     Cash paid during the period for:
        Interest                                                   $ 1,254    $ 1,381
                                                                   =======    =======

        Income taxes                                               $   136    $    67
                                                                   =======    =======
</TABLE>

               See accompanying notes to consolidated financial statements.

                                       4

<PAGE>



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



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

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

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

The  results of  operations  for the three  months  ended June 30,  2002 are not
necessarily  indicative  of the results to be expected for the year ending March
31, 2002 or any other period. The unaudited  consolidated  financial  statements
and notes  thereto  should be read in  conjunction  with the  audited  financial
statements and notes thereto for the year ended March 31, 2002.

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

On June 14, 2002,  the Board of  Directors  of the Company  declared a $0.12 per
share  regular cash  dividend and a $0.30 per share special cash dividend on the
Company's  outstanding shares of common stock, payable to stockholders of record
as of June 28, 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 July 15, 2002.  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  June  30,  2002 and  2001,  the  Company's  total
comprehensive   income  was   $115,000   and   $138,000,   respectively.   Total
comprehensive income is comprised of net income and other comprehensive  income.
For both three month periods, 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
                                                              -------------------------

                                                                June 30,       June 30,
                                                                  2002           2001
                                                              ----------     ----------
<S>                                                         <C>            <C>
Basic EPS computation:
 Numerator-Net Income                                         $  115,000     $  138,000
 Denominator-Wt Avg common shares outstanding                  3,139,367      3,130,993
Basic EPS                                                     $      .04     $      .04
                                                              ==========     ==========

Diluted EPS computation:
 Numerator-Net Income                                         $  115,000     $  138,000
 Denominator-Wt Avg common shares outstanding                  3,139,367      3,130,993
 Dilutive Stock Options                                           73,164         24,341
                                                              ----------     ----------
 Weighted avg common shares and common stock equivalents       3,212,531      3,155,334
Diluted EPS                                                   $      .04     $      .04
                                                              ==========     ==========
</TABLE>


For the quarter  ended June 30, 2001,  7,683 RSP shares were  excluded  from the
diluted EPS computation due to their  anti-dilutive  effect.  Shares outstanding
for the three months  ended June 30, 2001 do not include  6,078 ESOP shares that
were  unallocated  in  accordance  with  Statement  of  Position  ("SOP")  93-6,
"Employers' Accounting for Employees Stock Ownership Plans".

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  $155,458,000 at June 30, 2002, are reflective of
an increase of $340,000 or 0.2%, as compared to  $155,118,000 at March 31, 2002.
The  increase in total  assets was due to increases in cash and amounts due from
depository institutions,  mortgage-backed securities, loans receivable,  Federal
Home Loan Bank stock, and prepaid expenses and other assets, offset by decreases
in  investment  securities,   interest-bearing  deposits  with  other  financial
institutions, premises and equipment and accrued interest receivable.

The increase in the  Company's  liabilities  was  primarily  due to increases in
deposits and accrued expenses and other  liabilities.  Changes in the components
of assets, liabilities and equity are discussed herein.

Cash  and  Cash  Equivalents.  Cash  and  cash  equivalents,  which  consist  of
interest-bearing  and  noninterest-bearing   deposits,   totaled  $3,740,000,  a
decrease  of  $837,000  or 18.3%  from the  prior  quarter.  This  decrease  was
primarily due to decreased  interest-bearing  deposits maintained at the Federal
Home Loan Bank ("FHLB").

Investment  Securities.  Investment  securities totaled  $16,155,000 at June 30,
2002, a decrease of $1,266,000 or 7.3%, as compared to  $17,421,000 at March 31,
2002. The decrease was primarily due to proceeds received from maturities, calls
and  payments  totaling  $1.6  million,  offset by purchases of $300,000 of U.S.
Agency securities.

Mortgage-backed  Securities.  Mortgage-backed  securities totaled $80,512,000 at
June 30, 2002, an increase of $2,448,000 or 3.1%, as compared to  $78,064,000 at
March 31, 2002.  The increase was  primarily  due to purchases of $9.1  million,
partially offset by principal repayments and maturities totaling $6.7 million.

Loans   Receivable,   net.  Net  loans  receivable  at  June  30,  2002  totaled
$45,882,000,  an increase of $17,000 or 0.04%,  as  compared to  $45,865,000  at
March 31, 2002. The increase was primarily due to principal  repayments totaling
$2.7 million, partially offset by the origination of $161,000 in consumer loans,
and purchases of $1.4 million  conventional one- to four-family  mortgage loans,
$657,000   insured   Federal   Housing   Administration   ("FHA")  and  Veterans
Administration ("VA") one- to four-family mortgage loans, and a $461,000 insured
United States Department of Agriculture ("USDA") farm loan.

Deposits. Total deposits, after interest credited, increased by $195,000 or 0.2%
to  $78,715,000  at June 30, 2002, as compared to $78,520,000 at March 31, 2002.
The   increase  was  due  to  increases   in   passbook,   Money   Market,   and
interest-bearing  and  non-interest  bearing  checking  accounts,  offset  by  a
decrease in certificate of deposit accounts.

FHLB Advances. FHLB advances totaled $48,000,000 at both June 30, 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 $24,198,000 at June 30, 2002,
as compared to  $24,611,000  at March 31, 2002. The decrease of $413,000 or 1.7%
was primarily due to the payment of a $0.12 regular  quarterly cash dividend and
a $0.30 special cash dividend, partially offset by earnings for the three months
ended June 30, 2002.

                                       7

<PAGE>

Results of Operations for the Three Months Ended June 30, 2002 and 2001

Net Income.  The Company  recorded  net income of $115,000  for the three months
ended June 30, 2002,  as compared to net income of $138,000 for the three months
ended June 30, 2001.  The $23,000 or 16.7%  decrease in net income for the three
months ended June 30, 2002 was the result of a decrease in net interest  income,
partially  offset by decreases in other expenses and provision for income taxes,
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  $114,000 or 12.5% for the
three months  ended June 30,  2002,  as compared to the three month period ended
June 30, 2001. The average  balance of  interest-earning  assets  increased $3.9
million or 2.7%,  however,  the average yield earned thereon  decreased 86 basis
points. The average balance of  interest-bearing  liabilities  increased by $4.3
million or 3.5%,  however,  the average  rate paid  thereon  decreased  60 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 1.50% for the three month period ended June 30, 2002
from 1.76% for the three month period  ended June 30, 2001.  The decrease in the
net interest  rate spread was  primarily  the result of decreased  yields on the
average balances of interest  earning assets,  offset by decreased rates paid on
the average balances of savings deposits.

Interest Income.  Interest income decreased  $252,000 or 10.4% to $2,173,000 for
the three month period ended June 30, 2002,  as compared to  $2,425,000  for the
three month period ended June 30, 2001.

Interest on loans  receivable  decreased  $115,000 or 12.8% for the three months
ended June 30, 2002,  as compared to the three month period ended June 30, 2001.
This decrease was primarily the result of a $3.8 million decrease in the average
balance of loans  receivable  and a 41 basis point decrease in the average yield
earned thereon.

Interest income on  mortgage-backed  securities  increased $149,000 or 15.4% for
the three months ended June 30, 2002, as compared to the three months ended June
30, 2001. This increase was primarily the result of a $22.8 million  increase in
the average balance of mortgage-backed  securities,  offset by a 116 basis point
decrease in the average yield earned thereon.

Interest income on investment  securities decreased by $178,000 or 42.1% for the
three months ended June 30, 2002, as compared to the three months ended June 30,
2001. The decrease in interest income on investment securities was primarily due
to a decrease of $8.5 million 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 by $108,000 or 78.3%
for the three months ended June 30, 2002,  as compared to the three months ended
June 30, 2001. The decrease was primarily due to a $6.7 million  decrease in the
average balance of other interest-earning  assets and a 227 basis point decrease
in the average yield earned thereon.

The average yield on the average  balance of  interest-earning  assets was 5.88%
and  6.74%  for  the  three  month   periods  ended  June  30,  2002  and  2001,
respectively.

Interest Expense. Interest expense totaled $1,373,000 for the three months ended
June 30,  2002,  as compared to  $1,511,000  for the three months ended June 30,
2001.  The  $138,000  or 9.1%  decrease  was  primarily  due to a 60 basis point
decrease  in the  average  rate  paid  on  the  total  average  interest-bearing
liabilities,  partially offset by a $4.3 million increase in the average balance
of deposits.

Interest expense on deposits  (including escrows) totaled $710,000 for the three
months ended June 30,  2002,  as compared to $848,000 for the three months ended
June 30, 2001.  The $138,000 or 16.3%  decrease was  primarily due to a 97 basis
point  decrease in the  average  rate paid on deposits  and  escrows,  partially
offset by a $4.3 million increase in the average balance of deposits.

Interest on FHLB  advances  totaled  $663,000 for both three month periods ended
June 30, 2002 and 2001.  The Company uses FHLB advances as a funding  source and
to supplement deposits, which are the Company's primary source of funds.

                                       8
<PAGE>

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

Allowance for Loan Losses. Based upon management's  evaluation of the underlying
credit risk of the loan  portfolio  and the level of allowance  for loan losses,
the Company  established  no  provisions  for loan losses during the three month
periods ended June 30, 2002 and 2001.

At both June 30, 2002 and March 31, 2002,  the allowance for loan losses totaled
$425,000  or 0.9% of  total  loans.  The  allowance  for  loan  losses  to total
non-performing  loans  totaled  477.5% and 376.1%,  respectively.  The Company's
non-performing  loans  (non-accrual  loans  and  accruing  loans 90 days or more
overdue)  totaled  $89,000 and  $113,000  at June 30,  2002 and March 31,  2002,
respectively,  which  represented  0.19% and 0.25% of the Company's total loans,
respectively.  The Company's ratio of non-performing  loans to total assets were
0.06% and 0.07% at June 30, 2002 and March 31, 2002, respectively.

Other  Income.  During  the three  months  ended  June 30,  2002,  other  income
increased $9,000 or 21.4%, as compared to the three months ended June 30, 2001.

Other  Expenses.  Total other  expenses  decreased by $68,000 or 9.3% during the
three months ended June 30, 2002, as compared to the three months ended June 30,
2001.  The  decrease  was  primarily  attributable  to a decrease  of $60,000 in
compensation  and  employee  benefits  expense  and  $9,000  in other  operating
expenses,  offset by a $1,000  increase in premises  and  occupancy  costs.  The
decrease in compensation  and employee  benefits expense was due to decreases of
$27,000 in compensation and employee benefits  expense,  $63,000 in ESOP expense
due to the  completion  of the ESOP awards on December 31, 2001,  and $20,000 in
RSP expense due to the completion of the RSP awards on April 16, 2002, partially
offset  by an  increase  of  $50,000  in the  Company's  defined  benefit  plan,
Supplemental  Employee  Retirement Plan ("SERP") and Director's  Retirement Plan
("DRP")  costs.  The increase in SERP/DRP costs was due to a SERP amendment made
in September 2001.

Income Tax Expense.  The provision for income tax totaled  $71,000 for the three
months  ended June 30,  2002,  as compared to $85,000 for the three months ended
June 30, 2001. The $14,000 or 16.5% decrease was due to decreased income.

Regulatory Capital Requirements

The Bank is subject to federal  regulations  that impose certain minimum capital
requirements. Quantitative measures, established by regulation to ensure capital
adequacy,  require the Bank to maintain  amounts and ratios of tangible and core
capital  to  adjusted  total  assets  and  of  total   risk-basked   capital  to
risk-weighted  assets.  On June 30, 2002,  the Bank was in  compliance  with its
three regulatory capital requirements as follows:

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

Tangible capital                            $24,553         15.80%
Tangible capital requirement                  2,331          1.50
                                            -------         -----
Excess over requirement                     $22,222         14.30%
                                            =======         =====

Core capital                                $24,553         15.80%
Core capital requirement                      4,661          3.00
                                            -------         -----
Excess over requirement                     $19,892         12.80%
                                            =======         =====

Risk based capital                          $24,978         58.85%
Risk based capital requirement                3,395          8.00
                                            -------         -----
Excess over requirement                     $21,583         50.85%
                                            =======         =====


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.

                                       9

<PAGE>

                           PART II - OTHER INFORMATION




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

           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)   Not applicable

           b)   Not applicable


                                       10

<PAGE>



                                   SIGNATURES

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


                                   SKIBO FINANCIAL CORP.


Date: July 19, 2002                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.


/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 Assistant Secretary
                                          (Principal Financial and
                                          Accounting Officer)

Date: July 19, 2002                       Date: July 19, 2002