UNITED STATES
                           SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C.  20549

                                          FORM 10-Q

(Mark One)

{ X }  Quarterly Report Under Section 13 or 15(d) of the Securities Exchange   
       Act of 1934 For the Quarterly Period Ended December 31, 1997

{   } Transition Report Pursuant to Section 13 or 15(d) of the Securities      
      Exchange Act of 1934 For the Transition Period from
      to                                                  ---------------
         ----------------
       Commission File Number:   0-22445
                                 -------

                           FIRSTSPARTAN FINANCIAL CORP.
             (Exact name of Registrant as specified in its charter)

        Delaware                                      56-2015272
-------------------------------           -----------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

             380 East Main Street, Spartanburg, South Carolina 29302
             -------------------------------------------------------
                     (Address of principal executive office)

                                  (864) 582-2391
                                ------------------
                         (Registrant's telephone number)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during 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
                            -------          -------

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.

Common Stock Issued and Outstanding: 4,430,375 as of February 11, 1998.
                                     ---------

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                             FIRSTSPARTAN FINANCIAL CORP.

                                   Table of Contents

                                                                               
                                                                          Page
Part I.       Financial Information
-------       ---------------------

Item 1.       Financial Statements  (unaudited)                                

              Consolidated Balance Sheets at December 31, 1997
              and June 30, 1997                                             1

              Consolidated Statements of Income for the Three and
              Six-Month Periods Ended December 31, 1997 and 1996            2

              Consolidated Statements of Cash Flows for the Three and          
              Six-Month Periods Ended December 31, 1997 and 1996          3-4

              Notes to Consolidated Financial Statements                    5

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations                        6-11

Item 3.       Quantitative and Qualitative Disclosures About Market Risk   12

Part II.      Other Information
--------      ------------------                                        13-14

Signatures                                                                 15


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<PAGE>
ITEM 1.  FINANCIAL STATEMENTS

                                FIRSTSPARTAN FINANCIAL CORP.
                                CONSOLIDATED BALANCE SHEETS
                             (In Thousands, Except Share Data)
                                        (Unaudited)
                                               December 31,       June 30,
ASSETS                                            1997              1997
                                               -----------        --------

Cash                                            $  7,678          $  6,688
Federal funds sold and overnight
 interest-bearing deposits                        58,446           270,384
                                              ----------        - --------
  Total cash and cash equivalents                 66,124           277,072
Investment securities available-for-sale
 - at fair value (amortized cost: $17,347
 and $10,172 at December 31, 1997 and
 June 30, 1997, respectively)                     17,394            10,201
Mortgage-backed securities held-to-maturity
 - at amortized cost (fair value: $105 and
 $125 at December 31, 1997 and
 June 30, 1997, respectively)                        105               121

Loans receivable, net                            396,367           362,728
Loans held-for-sale - at lower of cost
 or market (market value: $1,292 and
 $1,617 at December 31, 1997 and
 June 30, 1997, respectively)                      1,292             1,617
Office properties and equipment, net               7,398             6,594
Federal Home Loan Bank of Atlanta Stock -
 at cost                                           3,011             3,011
Accrued interest receivable                        2,833             2,590
Real estate acquired in settlement of loans           36                36
Other assets                                         759             1,476
                                              ----------        ----------
TOTAL ASSETS                                  $  495,319        $  665,446
                                              ==========        ==========

LIABILITIES AND EQUITY

LIABILITIES:
 Deposit accounts                             $  358,057        $  353,193
 Stock subscription escrow accounts                                259,329
 Advances from borrowers for taxes
  and insurance                                      414             1,001
 Other liabilities                                 6,090             4,945
                                              ----------        ----------
     Total liabilities                           364,561           618,468
                                              ----------        ----------
EQUITY:
 Common stock, $0.01 par value:
   Authorized 12,000,000 shares; issued
    and outstanding December 31, 1997
    - 4,430,375 shares                                44
 Additional paid in capital                       87,280
 Unallocated ESOP shares                          (6,737)
 Retained earnings                                50,142            46,960
 Unrealized gain on securities
  available-for-sale, net of taxes                    29                18
                                              ----------        ----------
     Total equity                                130,758            46,978
                                              ----------        ----------
TOTAL LIABILITIES AND EQUITY                  $  495,319        $  665,446
                                              ==========        ==========

See accompanying notes to consolidated financial statements.

                                      1

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                                  FIRSTSPARTAN FINANCIAL CORP.
                               CONSOLIDATED STATEMENTS OF INCOME
                             (In Thousands, Except Per Share Data)
                                           (Unaudited)

                                  Three Months Ended          Six Months Ended
                                     December 31,                December 31,
                                  ------------------          ----------------
                                  1997          1996          1997        1996
                                  ----          ----          ----        ----
INVESTMENT INCOME:
 Interest on loans           $   7,922     $   6,723     $  15,548   $  13,305
 Interest and dividends on
  investment securities,
  mortgage-backed securities
  and other                      1,293           437         3,078         852
                             ---------     ---------     ---------   ---------
 Total investment income         9,215         7,160        18,626      14,157

INTEREST EXPENSE:
 Deposit accounts                4,292         3,828         8,591       7,568
                             ---------     ---------     ---------   ---------
NET INTEREST INCOME              4,923         3,332        10,035       6,589

PROVISION FOR LOAN LOSSES           90           646           180         675
                             ---------     ---------     ---------   ---------
NET INTEREST INCOME AFTER                                                      
 PROVISION FOR LOAN LOSSES       4,833         2,686         9,855       5,914
                             ---------     ---------     ---------   ---------
NONINTEREST INCOME (LOSS):                                                     
 Service charges and fees          364           275           693         544
 Gain on sale of mortgage
  loans                                           37                        37
 Loss on sale of investments                                              (16)
 Other, net                        123            30           243          85
                             ---------     ---------     ---------   --------- 
 Total noninterest income,
  net                              487           342           936         650
                             ---------     ---------     ---------   ---------
NONINTEREST EXPENSE:                                                           
 Employee compensation
  and benefits                   1,274           890         2,481       1,733
 Federal deposit insurance
  premium                           79           137           156       2,131
 Occupancy and equipment
  expense                          262           295           510         497
 Computer services                 168           125           321         250
 Advertising and promotions        127           150           260         235
 Office supplies, postage,
  printing, etc.                   138           114           284         246
 Other                             363           287           610         500
                             ---------     ---------     ---------   --------- 
 Total noninterest expense       2,411         1,998         4,622       5,592
                             ---------     ---------     ---------   --------- 
INCOME BEFORE INCOME TAXES       2,909         1,030         6,169         972
                                                                               
PROVISION FOR INCOME TAXES       1,150           387         2,375         365
                             ---------     ---------     ---------   ---------
NET INCOME                   $   1,759     $     643     $   3,794   $     607
                             =========     =========     =========   ========= 
Basic earnings per share     $    0.43     $     N/A     $    0.93   $     N/A
                             =========     =========     =========   =========
Weighted average shares
  outstanding(1)                 4,088           N/A         4,084         N/A
                             =========     =========     =========   =========

(1)  FirstSpartan's initial public offering closed on July 8, 1997.  For       
     purposes of earnings per share calculations, shares issued on July 8,     
     1997 have been assumed to be outstanding as of July 1, 1997.

See accompanying notes to consolidated financial statements.
                                      2
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                                 FIRSTSPARTAN FINANCIAL CORP.
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       (In Thousands)
                                        (Unaudited)

                                   Three Months Ended         Six Months Ended
                                      December 31,               December 31,
                                   ------------------         ----------------
                                   1997        1996           1997        1996
                                   ----        ----           ----        ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
 Net income                    $  1,759      $  643       $  3,794     $  607
 Adjustments to reconcile net
  income to net cash provided
  by operating activities: 
 Provision for loan losses           90         646            180        675
 Deferred income tax benefit        (12)       (216)           (56)      (325)
 Amortization of deferred income     (1)        (53)           (33)       (83)
 Accretion of discounts on
  investment and mortgage-backed
  securities                                     (5)                      (11)
 Depreciation                       141         188            279        300
 Allocation of ESOP shares
  at fair value                     384                        651
 Decrease (increase) in other
  assets                            (95)        126            474       (306)
 Additions to loans held-for-
  sale                           (1,555)     (1,473)        (3,813)    (6,031)
 Proceeds from sale of loans
  held-for-sale                   2,143       4,045          4,138      6,535
 Gain on sale of loans
  held-for-sale                                 (37)                      (37)
 Loss on disposal of property
  and equipment                                  16                        16
 Loss on sale of real estate
  acquired in settlement of
  loans                                          16
 Loss on sale of investments
  available-for-sale                                                       16
 Increase (decrease) in other
  liabilities                    (1,115)        (809)          606         41
                               --------       -------      --------   --------
Net cash provided by operating
  activities                      1,739        3,087         6,220      1,397
                               --------       -------      --------   --------
CASH FLOWS FROM INVESTING
 ACTIVITIES: 
 Net loan originations and
  principal collections        (12,353)       (4,146)      (23,678)   (14,208)
 Purchase of loans              (5,007)       (2,987)      (10,108)    (3,204)
 Purchase of investment
  securities                    (2,104)          (84)      (10,174)    (1,226)
 Proceeds from sale of
  investment securities
   available-for-sale                                                   5,000
 Proceeds from maturities of
  investment securities
   available-for-sale            1,000                       3,000      1,000
 Principal collections from
  mortgage-backed securities        11            25            16         68
 Proceeds from sale of real
  estate acquired in settle-
  ment of loans                                    1                       58
 Purchase of property and
  equipment                       (668)         (420)       (1,083)      (685) 
                               --------       -------      --------   --------
Net cash used in investing
 activities                    (19,121)       (7,611)      (42,027)   (13,197)
                               --------       -------      --------   --------
CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Net increase in deposits       12,613        11,988        24,906     18,120
 Stock subscription refunds                              (197,851)
 Stock issuance costs                                      (1,584)

       Dividends paid             (612)                      (612)
                               -------       -------      --------   --------
     Net cash provided by
     (used in) financing
      activities              $ 12,001     $ 11,988     $(175,141)   $ 18,120
                              --------      -------     ---------    --------


                                      3
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<PAGE>
                            FIRSTSPARTAN FINANCIAL CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)
                                  (Unaudited)

                             Three Months Ended       Six Months Ended
                               December 31,             December 31,
                             ------------------       ----------------
                             1997        1996         1997        1996
                             ----        ----         ----        ----

NET INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS                $ (5,381)    $ 7,464     (210,948)       6,320
                            ---------    -------     ---------       -----

CASH AND CASH EQUIVALENTS
 AT BEGINNING OF PERIOD       71,505       9,640      277,072       10,784
                           ---------     -------     ---------       -----

CASH AND CASH EQUIVALENTS
 AT END OF PERIOD        $    66,124 $    17,104  $    66,124  $    17,104
                         =========== ===========  ===========  ===========

SUPPLEMENTAL DISCLOSURES
 OF CASH FLOW INFORMATION:
 Cash paid during the
  period for:
   Interest              $     4,160  $     3,582  $     8,604 $     7,279
                         ===========  ===========  =========== ===========
   Income taxes          $     2,360  $       394  $     2,435 $       469
                         ===========  ===========  =========== ===========
 Transfers from loans
  to real estate
  acquired in
  settlement of loans    $           $        (4) $            $       102
                         =========== ===========  ===========  ===========
 Change in unrealized
  gain (loss) on
  available-for-sale
  investments and
  marketable
  equity securities      $       (12)$      (170) $        19 $      (118)
                         =========== ===========  =========== ===========
 Increase (decrease)
  in deferred tax
  asset related to
  unrealized gain on
  investments            $         5 $      (26)  $        (8)$       (46)
                         =========== ===========  =========== ===========
 Sale of common stock
  funded by
  subscription
  escrow accounts        $           $            $    61,478 $
                         =========== ===========  =========== ===========
 Sale of common stock
  funded by deposit
  accounts               $           $            $ 20,042    $
                         =========== ===========  =========== ===========
                                                            
See accompanying notes to consolidated financial statements.

                                    4
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                             FIRSTSPARTAN FINANCIAL CORP.
                    Notes to Consolidated Financial Statements

1.     Basis of Presentation

       FirstSpartan Financial Corp. ("FirstSpartan" or the "Company"), a       
       Delaware corporation, was incorporated on February 4, 1997 for the      
       purpose of becoming the holding company for First Federal Savings and   
       Loan Association of Spartanburg (now known as First Federal Bank)       
       ("First Federal" or the "Bank") upon the Bank's conversion from a       
       federally chartered mutual savings and loan association to a federally  
       chartered stock savings and loan association ("Conversion").  The       
       Conversion was completed on July 8, 1997 through the sale and issuance  
       of 4,430,375 shares of common stock by the Company.  Information set    
       forth in this report relating to periods prior to the Conversion,       
       including consolidated financial statements and related data, relates   
       to First Federal and its subsidiary.

       The accompanying consolidated financial statements of the Corporation   
       have been prepared in accordance with instructions to Form 10-Q.        
       Accordingly, they do not include all of the information and footnotes   
       required by generally accepted accounting principles for complete       
       financial statements.  However, such information reflects all           
       adjustments (consisting solely of normal recurring adjustments) which   
       are, in the opinion of management, necessary for a fair statement of    
       results for the interim periods.

       The results of operations for the three and/or six months ended         
       December 31, 1997 are not necessarily indicative of the results to be   
       expected for the year ending June 30, 1998.  The consolidated financial 
       statements and notes thereto should be read in conjunction with the     
       audited financial statements and notes thereto for the year ended June  
       30, 1997.

2.     Earnings Per Share

       Earnings per share has been computed for the three and six months ended 
       December 31, 1997 based upon weighted average common shares outstanding 
       of 4,087,721 and 4,083,729, respectively.  For the purposes of          
       computing weighted average shares outstanding for the six months ended  
       December 31, 1997, shares issued in the Conversion on July 8, 1997 were 
       assumed to have been outstanding since July 1, 1997.  Earnings per      
       share for the three and six months ended December 31, 1996 is not       
       presented as there was no common stock issued or outstanding.

       Statement of Financial Accounting Standards No. 128, Earnings Per       
       Share, established new standards for computing and presenting earnings  
       per share.  The standard is effective for annual and interim periods    
       ending after December 15, 1997.  This standard had no impact on the     
       computation of the Company's earnings per share upon adoption.

                                      5
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<PAGE>
Item 2.     Management's Discussion and Analysis of Financial Condition and    
            Results of Operations

Comparison of Financial Condition at December 31, 1997 and June 30, 1997

       Total assets were $495.3 million at December 31, 1997 and $665.4        
       million at June 30, 1997, a decrease of $170.1 million or 25.6%.   This 
       decrease resulted primarily from a $211.9 million decrease in federal   
       funds sold and overnight interest-bearing deposits offset by an         
       increase of $33.6 million, or 9.3%, in loans receivable, net, and an    
       increase of $7.2 million, or 70.6%,  in investment securities           
       available-for-sale.  The primary reason for the decrease in             
       interest-bearing deposits was the refund of subscription escrow         
       accounts of $197.9 million related to the Conversion.  Loans            
       receivable, net, increased primarily as a result of an increase of      
       $22.5 million in mortgage loans since June 30, 1997.  Included in the   
       $22.5 million increase was a $14.7 million increase in one- to- four    
       family mortgage loans (including the purchase of $10.1 million of one-  
       to- four family mortgage loans from the mortgage banking company in     
       which the Bank's service corporation has an equity investment), a $5.8  
       million increase in multifamily and commercial and other mortgage loans 
       and a $2.0 million increase in land mortgage loans.  Loans receivable,  
       net, also increased due to a $4.1 million increase in non-mortgage      
       commercial business loans and a $3.8 million increase in home equity    
       loans.  The increase in loans was attributable to market demand         
       unaffected by any promotional interest rate pricing or other            
       promotions.  The increase in loans receivable, net, was funded          
       primarily through an increase in deposits before withdrawals to         
       purchase common stock issued in the Conversion and the use of cash      
       equivalents.

       Deposit accounts increased $4.9 million to $358.1 million at December   
       31, 1997 from $353.2 million at June 30, 1997.  This increase is after  
       approximately $20.0 million of withdrawals by depositors subsequent to  
       June 30, 1997 to purchase stock issued in the Conversion.  Excluding    
       the effect of stock purchase withdrawals, there was an increase in      
       deposit accounts of $24.9 million.  The increase in deposits was the    
       result of interest credited to deposit accounts during the period, the  
       effect of two recently opened branch officers, a special checking       
       account promotion and deposits of funds by account holders who had been 
       issued stock in the Conversion but sold their stock after issuance.     
       Stock subscription escrow accounts decreased by $259.3 million from     
       June 30, 1997 to December 31, 1997 as a result of $61.4 million of      
       stock issued in the Conversion funded by the escrow accounts and        
       refunds to subscribers of $197.9 million.

       Stockholders' equity increased by $83.8 million from June 30, 1997 to   
       December 31, 1997 as a result of net proceeds received in the           
       Conversion of $79.9 million, net income of $3.8 million and allocation  
       of shares under the Bank's Employee Stock Ownership Plan ("ESOP") with  
       a market value of $650,000, offset by payment of dividends of $612,000.

       Nonperforming assets and troubled debt restructurings decreased by      
       $608,000, or 21.0%, to $2.3 million at December 31, 1997 from $2.9      
       million at June 30, 1997.  The decrease was due primarily to a $446,000 
       decrease in construction loans contractually past due more than 90 days 
       and still accruing and a $285,000 decrease in troubled debt             
       restructurings more than offsetting a $234,000 increase in construction 
       loans accounted for on a nonaccrual basis.
  
                                      6
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<PAGE>
Comparison of Operating Results for the Three Months Ended December 31, 1997
and December 31, 1996

       Net Income.   Net income increased to $1.8 million for the three months 
       ended December 31, 1997 from $643,000 for the three months ended        
       December 31, 1996 primarily as a result of  increased investment income 
       offset partially by an increased provision for income taxes due to      
       increased income before income taxes.  The increase in investment       
       income is principally the result of additional funds available for      
       investment in the three-month period ended December 31, 1997 from the   
       Conversion.

       Net Interest Income.   Net interest income increased 48.5% to $4.9      
       million for the three months ended December 31, 1997 from $3.3 million  
       for the three months ended December 31, 1996.  Investment income        
       increased 27.8% to $9.2 million for the three months ended December 31, 
       1997 from $7.2 million for the three months ended December 31, 1996 as  
       a result of an increase in the average balance of interest-earning      
       assets to $474.5 million from $356.9 million more than offsetting a     
       decrease in average yield on interest-earning assets to 7.70% from      
       7.96% for the respective three-month periods.  The decrease in the      
       average yield on interest-earning assets was due principally to         
       proceeds of the Conversion being invested principally in lower yielding 
       overnight interest-bearing deposits during the quarter ended December   
       31, 1997.  The average balance of interest-earning assets increased as  
       a result of the net proceeds retained from the Conversion and an        
       increase in the average balance of loans receivable.

       Interest expense increased 13.2% to $4.3 million for the three months   
       ended December 31, 1997 from $3.8 million for the three months ended    
       December 31, 1996 as a result of an increase in the average balance of  
       deposits to $352.9 million from $317.4 million in the comparable three  
       month period.  The average cost of deposits also increased slightly to  
       4.83% for the three months ended December 31, 1997 from 4.79% for the   
       three months ended December 31, 1996.  The average balance increased as 
       the result of the opening of two new branch offices and various deposit 
       promotions that have increased deposit balances since the prior year's  
       comparable quarter.  Interest rate spread decreased to 2.88% for the    
       three months ended December 31, 1997 from 3.17% for the three months    
       ended December 31, 1996.

       Provision for Loan Losses.  Provisions for loan losses are charges to   
       earnings to bring the total allowance for loan losses to a level        
       considered by management as adequate to provide for estimated loan      
       losses based on management's evaluation of the collectibility of the    
       loan portfolio, including the nature of the portfolio, credit           
       concentrations, trends in historical loss experience, specific impaired 
       loans and economic conditions.  Management also considers the level of  
       problem assets that the Company classifies according to OTS             
       regulations.  The Company gives greater weight to the level of          
       classified assets than to the level of nonperforming assets (nonaccrual 
       loans, accruing loans contractually past due 90 days or more, and real  
       estate acquired in settlement of loans) because classified assets       
       include not only nonperforming assets but also performing assets that   
       otherwise exhibit, in management's judgment, potential credit           
       weaknesses.

                                      7
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<PAGE>
       The provision for loan losses was $90,000 for the three months ended    
       December  31, 1997 compared to $646,000 for the three months ended      
       December 31, 1996.  Although classified assets decreased slightly       
       during the three months ended December 31, 1997 management expects      
       classified assets to increase moderately, although no assurances can be 
       given that this will in fact occur.  Management's expectation is based  
       upon its anticipation of continued loan growth, particularly in the     
       areas of construction, commercial real estate and consumer lending.     
       Management deemed the allowance for loan losses adequate at December    
       31, 1997.

       Noninterest Income.   Noninterest income increased to $487,000 for the  
       three months ended December 31, 1997 from $342,000 for the three months 
       ended December 31, 1996, primarily as a result of an increase in        
       service charges and fees.  Service charges and fees increased to        
       $364,000 for the three months ended December 31, 1997 from $275,000 for 
       the three months ended December 31, 1996 primarily as a result of       
       increased income associated with the origination and sale of FHA and VA 
       mortgage loans and increased deposit account fees, particularly on the  
       increased number of NOW accounts.  Other income, net increased to       
       $123,000 for the three months ended December 31, 1997 from $30,000 for  
       the three months ended December 31, 1996, partially attributable to     
       income of $12,000 in the current three-month period versus a $69,000    
       loss for the same period for the previous year, representing the        
       Company's share of net income of  the mortgage banking company in which 
       the Bank's service corporation subsidiary has an equity investment.

       Noninterest Expense.   Noninterest expense was $2.4 million for the     
       three months ended December 31, 1997 compared to $2.0 million for the   
       same period in 1996.  Employee compensation and benefits, increased to  
       $1.3 million for the three months ended December 31, 1997 from $890,000 
       for the three months ended December 31, 1996 primarily as a result of   
       the hiring of additional personnel for two new branch offices which     
       became fully operational during the quarter ended September 30, 1997,   
       the establishment of a commercial lending department, normal annual     
       salary increases and implementation of the Bank's ESOP.  The increases  
       in other categories of other operating expenses generally are           
       attributable to the growth of the Company, additional costs associated  
       with operating as a public company and to inflation.  The Company       
       anticipates that other operating expenses will continue to increase in  
       subsequent periods as a result of increased costs associated with       
       operating as a public company.  The two new branch offices also will    
       continue to contribute to increased operating expenses in future        
       periods as will the two recently announced branch offices that are      
       expected to open in the quarters ending March 31, 1998 and June 30,     
       1998, respectively.

       Income Taxes.   The provision for income taxes was $1.2 million for the 
       three months ended December 31, 1997 compared to $387,000 for the three 
       months ended December 31, 1996 as a result of higher income before      
       income taxes.

                                      8
<PAGE>
<PAGE>
Comparison of Operating Results for the Six Months Ended December 31, 1997 and
December 31, 1996

       Net Income.   Net income increased to $3.8 million for the six months   
       ended December 31, 1997 from $607,000 for the six months ended December 
       31, 1996 primarily as a result of  increased investment income,         
       increased noninterest income and decreased noninterest expense          
       partially offset by an increased provision for income taxes due to      
       increased income before income taxes.  The increase in investment       
       income is principally the result of additional funds available for      
       investment from the Conversion in the six months ended December 31,     
       1997.  The decrease in noninterest expense is principally the result of 
       decreased federal deposit insurance premiums which were impacted in the 
       six months ended December 31, 1996 by the legislatively-mandated,       
       one-time assessment levied by the Federal Deposit Insurance Corporation 
       ("FDIC") on all institutions insured by the Savings Association         
       Insurance Fund ("SAIF") to recapitalize the SAIF.

       Net Interest Income.   Net interest income increased 51.5% to $10.0     
       million for the six months ended December 31, 1997 from $6.6 million    
       for the six months ended December 31, 1996.  Investment income          
       increased 31.0% to $18.6 million for the six months ended December 31,  
       1997 from $14.2 million for the six months ended December 31, 1996 as a 
       result of an increase in the average balance of interest- earning       
       assets to $475.2 million from $352.4 million more than offsetting a     
       decrease in average yield on interest-earning assets to 7.78% from      
       8.03% for the respective six-month periods.  The decrease in the        
       average yield on interest-earning assets was due principally to stock   
       subscription escrow funds held prior to the consummation of the         
       Conversion and proceeds of the Conversion being invested principally in 
       lower yielding overnight interest-bearing deposits during the six       
       months ended December 31, 1997.  The average balance of                 
       interest-earning assets increased as a result of the holding of stock   
       subscription escrow funds prior to the consummation of the Conversion   
       which were invested in overnight interest-bearing deposits, the net     
       proceeds retained from the Conversion and an increase in the average    
       balance of loans receivable.

       Interest expense increased 13.2% to $8.6 million for the six months     
       ended December 31, 1997 from $7.6 million for the six months ended      
       December 31, 1996 as a result of an increase in the average balance of  
       deposits to $361.4 million from $313.7 million in the comparable        
       six-month period.  The increase in the average balance of deposits more 
       than offset a decrease in the average cost of deposits to 4.72% for the 
       six months ended December 31, 1997 from 4.82% for the six months ended  
       December 31, 1996.  The average balance of deposits during the six      
       months ended December 31, 1997 includes the average balance of the      
       special escrow accounts established to hold subscription funds received 
       in connection with the Conversion.  These accounts amounted to $259.3   
       million and were outstanding for approximately two weeks during the     
       six-month period ended December 31, 1997.  The average balance also     
       increased as the result of the opening of two new branch offices and    
       various deposit promotions that have increased deposit balances since   
       the prior year's comparable quarter and was offset by the withdrawal of 
       approximately $20.0 million of deposits to fund stock purchases in the  
       Conversion as discussed under "Comparison of Financial Condition at     
       December 31, 1997 and June 30, 1997."  The decrease in the average cost 
       of deposits resulted from the passbook rate of interest (2.5%) being    
       paid on the subscription escrow accounts and an increase in the amount  
       of deposits in lower cost negotiable order of withdrawal ("NOW") and    
       passbook accounts as a result of promotions of NOW and passbook         
       accounts.  Interest rate spread decreased to 3.06% for the six months   
       ended December 31, 1997 from 3.21% for the  six months ended December   
       31, 1996.

                                      9
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       Provision for Loan Losses.  The provision for loan losses was $180,000  
       for the six months ended December 31, 1997 compared to $675,000 for the 
       six months ended December 31, 1996.  Although classified assets         
       decreased slightly during the six months ended December 31, 1997        
       management expects classified assets to increase moderately although no 
       assurances can be given that this will in fact occur.  Management's     
       expectation is based upon its anticipation of continued loan growth,    
       particularly in the areas of construction, commercial real estate and   
       consumer lending.

       Noninterest Income.   Noninterest income increased to $936,000 for the  
       six months ended December 31, 1997 from $650,000 for the six months     
       ended December 31, 1996, primarily as a result of an increase in        
       service charges and fees.  Service charges and fees increased to        
       $693,000 for the six months ended December 31, 1997 from $544,000 for   
       the six months ended December 31, 1996 primarily as a result of         
       increased income associated with the origination and sale of FHA and VA 
       mortgage loans and increased deposit account fees, particularly on the  
       increased number of NOW accounts.  Other income, net increased to       
       $243,000 for the six months ended December 31, 1997 from $85,000 for    
       the six months ended December 31, 1996, partially attributable to       
       income of $22,000 in the current six-month period versus a $98,000 loss 
       for the same period in the previous year, representing the Company's    
       share of net income of  the mortgage banking company in which the       
       Bank's service corporation subsidiary has an equity investment.

       Noninterest Expense.   Noninterest expense was $4.6 million for the six 
       months ended December 31, 1997 compared to $5.6 million for the same    
       period in 1996.  This decrease resulted primarily from the FDIC special 
       assessment in 1996 on all SAIF-insured institutions to recapitalize the 
       SAIF.  The Association's assessment amounted to $1.8 million and was    
       accrued during the quarter ended December 31, 1996.  Prior to the SAIF  
       recapitalization, the Bank's total annual deposit insurance premiums    
       amounted to 0.23% of assessable deposits.  Effective January 1, 1997,   
       the rate decreased to 0.065% of assessable deposits.  Employee          
       compensation and benefits, increased to $2.5 million for the six months 
       ended December 31, 1997 from $1.7 for the six months ended December 31, 
       1996 primarily as a result of the hiring of additional personnel for    
       two new branch offices that became fully operational during the quarter 
       ended September 30, 1997, the establishment of a commercial lending     
       department, normal annual salary increases and implementation of the    
       Bank's ESOP.  The increases in other categories of other operating      
       expenses generally are attributable to the growth of the Company,       
       additional costs associated with operating as a public company and to   
       inflation.  The Company anticipates that other operating expenses will  
       continue to increase in subsequent periods as a result of increased     
       costs associated with operating as a public company.  The two new       
       branch offices also will continue to contribute to increased operating  
       expenses in future periods as will the two recently announced branch    
       offices that are expected to open in the quarters ending March 31, 1998 
       and June 30, 1998, respectively.

       Income Taxes.   The provision for income taxes was $2.4 million for the 
       six months ended December 31, 1997 compared to $365,000 for the six     
       months ended December 31, 1996 as a result of higher income before      
       income taxes.

                                      10
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Liquidity and Capital Resources

       The Company's primary sources of funds are customer deposits, proceeds  
       from principal and interest payments from and the sale of loans,        
       maturing securities and FHLB of Atlanta advances.  While maturities and 
       scheduled amortization of loans are a predictable source of funds,      
       deposit flows and mortgage prepayments are influenced greatly by        
       general interest rates, other economic conditions and competition.      
       Regulations of the Office of Thrift Supervision ("OTS"), the Bank's     
       primary regulator, require the Bank to maintain an adequate level of    
       liquidity to ensure the availability of sufficient funds to fund loan   
       originations, deposit withdrawals and to satisfy other financial        
       commitments.  Currently, the OTS regulatory liquidity requirement for   
       the Bank is the maintenance of an average daily balance of liquid       
       assets (cash and eligible investments) equal to at least 4% of the      
       average daily balance of net withdrawable deposits and short-term       
       borrowings.  This liquidity requirement is subject to periodic change.  
       The Company and the Bank generally maintain sufficient cash and short-  
       term investments to meet short-term liquidity needs.  At December 31,   
       1997, cash and cash equivalents totaled $66.1 million, or 13.3% of      
       total assets, and investment securities classified as available-        
       for-sale with maturities of one year or less totaled $10.3 million.  At 
       December 31, 1997, the Bank also maintained, but did not draw upon, an  
       uncommitted credit facility with the FHLB of Atlanta, which provides    
       for immediately available advances up to an aggregate amount of $40.0   
       million.

       As of December 31, 1997, the Bank's regulatory capital was in excess of 
       all applicable regulatory requirements.  At December 31, 1997, under    
       regulations of the OTS, the Bank's actual tangible, core and risk-based 
       capital ratios were 19.0%, 19.0% and 31.6%, respectively, compared to   
       requirements of 1.5%, 3.0% and 8.0%, respectively.

       At December 31, 1997, the Company had loan commitments (excluding       
       undisbursed portions of interim construction loans) of approximately    
       $3.0 million ($2.2 million at fixed rates ranging from 6.75% to 9.00%). 
       In addition, at December 31, 1997, the unused portion of lines of       
       credit (principally variable rate home equity lines of credit) extended 
      by the Company was approximately $39.3 million.  Furthermore, at         
      December 31, 1997, the Company had certificates of deposit scheduled to  
     mature in one year or less of $186.7 million.

                                      11
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Item 3.       Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the quantitative and qualitative
disclosures about market risks as of December 31, 1997 than presented in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997.

                                      12
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                             FirstSpartan Financial Corp.

Part II.  Other Information

Item 1.       Legal Proceedings
              -----------------
              Not applicable

Item 2.       Changes in Securities and Use of Proceeds
              ------------------------------------------
              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
              -----------------
              None

                                      13
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Item 6.    Exhibits and Reports on Form 8-K
           --------------------------------

           (a)     Exhibits

                   (3)(a)    Certificate of Incorporation of the Registrant*
                   (3)(b)    Bylaws of the Registrant*
                   (10)(a)   Employment Agreement with Billy L. Painter**
                   (10)(b)   Employment Agreement with Hugh H. Brantley**
                   (10)(c)   Employment Agreement with J. Stephen Sinclair**
                   (10)(d)   Employment Agreement with R. Lamar Simpson***
                   (10)(e)   Severance Agreement with Rand Peterson**
                   (10)(f)   Severance Agreement with Thomas Bridgeman**
                   (10)(g)   Severance Agreement with Katherine A. Dunleavy***
                   (10)(h)   Employee Severance Compensation Plan**
                   (10)(i)   Employee Stock Ownership Plan**
                   (10)(j)   Registrant's 1997 Stock Option Plan****
                   (10)(k)   Registrant's Management Recognition and           
                             Development Plan****
                   (21)      Subsidiaries of the Registrant**
                   (27)      Financial Data Schedule

           (b)     Reports on Form 8-K:

                   On December 3, 1997, Form 8-K was filed reporting that      
                   First Federal intends to open two new branch offices in     
                   Greenville County, South Carolina.

--------------------
*      Filed as an exhibit to the Registrant's Registration Statement on Form  
       S-1 (333-23015) and incorporated herein by reference.
**     Filed as an exhibit to the Registrant's Annual Report on Form 10-K for  
       the fiscal year ended June 30, 1997 and incorporated herein by          
       reference.
***    Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q   
       for the quarter ended September 30, 1997 and incorporated herein by     
       reference.
****   Filed as an exhibit to the Registrant's Annual Meeting Definitive Proxy 
       Statement dated December 12, 1997 and incorporated herein by reference.

                                      14
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                                   Signatures

Pursuant to the requirements 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.



                                         FirstSpartan Financial Corp.

Date: February 11, 1998             By:  /s/ Billy L. Painter
                                         -------------------------------------
                                         Billy L. Painter
                                         President and Chief Executive Officer


Date: February 11, 1998             By:  /s/ R. Lamar Simpson
                                         -------------------------------------
                                         R. Lamar Simpson
                                         Treasurer, Secretary and Chief        
                                         Financial Officer

                                      15
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