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 September 30, 1999


[   ] 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 Outstanding: 3,787,970 shares as of November 8, 1999.
<PAGE>
                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES


                                Table of Contents


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

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets at September 30, 1999
         and June 30, 1999                                                     1

         Consolidated Statements of Income for the Three-Month Periods
         Ended September 30, 1999 and 1998                                     2

         Consolidated Statements of Stockholders' Equity for the Three-
         Month Periods Ended September 30, 1999 and 1998                       3

         Consolidated Statements of Cash Flows for the Three-Month
         Periods Ended September 30, 1999 and 1998                           4-5

         Notes to Consolidated Financial Statements                            6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          7-12

Item 3.  Quantitative and Qualitative Disclosures About Market Risk           12

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

Signatures                                                                    15

<PAGE>
ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                   FirstSpartan Financial Corp. and Subsidiaries
                                            Consolidated Balance Sheets
                                              (Dollars In Thousands)
                                                    (Unaudited)
                                                                                     September 30,      June 30,
                                                                                         1999            1999
                                                                                     -----------      -----------
<S>                                                                                  <C>              <C>
Assets

   Cash                                                                              $    10,763      $    14,638
   Federal funds sold and overnight interest-bearing deposits                             25,466           43,782
                                                                                     -----------      -----------
             Total cash and cash equivalents                                              36,229           58,420
   Investment securities available-for-sale - at fair value (amortized cost:
      $24,500 and $23,489 at September 30, 1999 and June 30, 1999, respectively)          24,260           23,344
   Mortgage-backed securities held-to-maturity - at amortized cost (fair value:
      $44 and $55 at September 30, 1999 and June 30, 1999, respectively)                      43               54
   Loans receivable, net                                                                 450,824          435,181
   Loans held-for-sale - at lower of cost or market (market value: $4,555
       and $9,089 at September 30, 1999 and June 30 1999, respectively)                    4,495            8,984
   Office properties and equipment, net                                                   10,481           10,370
   Federal Home Loan Bank of Atlanta stock  - at cost                                      3,612            3,612
   Accrued interest receivable                                                             3,478            3,203
   Real estate acquired in settlement of loans                                               348              348
   Other assets                                                                            7,369            2,209
                                                                                     -----------      -----------

               Total Assets                                                          $   541,139      $   545,725
                                                                                     ===========      ===========


Liabilities and Stockholders' Equity

   Liabilities:
     Deposit accounts                                                                $   408,008      $   406,011
     Advances from borrowers for taxes and insurance                                       1,457            1,004
     Advances from Federal Home Loan Bank of Atlanta                                      59,000           34,000
     Other borrowings                                                                       --             35,000
     Other liabilities                                                                     5,455            3,669
                                                                                     -----------      -----------
               Total liabilities                                                         473,920          479,684
                                                                                     -----------      -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                                  <C>              <C>
   Stockholders' Equity:
     Preferred stock, $0.01 par value:
       Authorized - 250,000 shares;  none issued or outstanding
          at September 30, 1999 and June 30, 1999                                           --               --
     Common stock, $0.01 par value:
       Authorized - 12,000,000 shares;  issued: 4,430,375 at September 30,
          1999 and June 30, 1999; outstanding: 3,787,970 at September 30,
          1999 and June 30, 1999                                                              44               44
     Additional paid-in capital                                                           82,385           82,289
     Retained earnings                                                                    15,969           15,264
     Treasury stock - at cost (642,405 shares at
          September 30, 1999 and June 30, 1999)                                          (20,955)         (20,955)
     Unearned restricted stock                                                            (4,370)          (4,660)
     Unallocated ESOP stock                                                               (5,704)          (5,851)
     Accumulated other comprehensive income                                                 (150)             (90)
                                                                                     -----------      -----------
               Total stockholders' equity                                                 67,219           66,041
                                                                                     -----------      -----------

               Total Liabilities and Stockholders' Equity                            $   541,139      $   545,725
                                                                                     ===========      ===========

</TABLE>

See accompanying notes to consolidated financial statements.

                                        1
<PAGE>
<TABLE>
<CAPTION>

                  FirstSpartan Financial Corp. and Subsidiaries
                        Consolidated Statements of Income
                  (Dollars In Thousands, Except Per Share Data)
                                   (Unaudited)

                                                            Three Months Ended
                                                               September 30,
                                                        -------------------------
                                                           1999            1998
                                                        ----------     ----------
<S>                                                     <C>            <C>
Investment Income:
   Interest on loans                                    $    8,837     $    8,537
   Interest and dividends on investment securities,
     mortgage-backed securities and other                      950          1,091
                                                        ----------     ----------
          Total investment income                            9,787          9,628
                                                        ----------     ----------

Interest Expense:
   Deposit accounts                                          4,194          4,315
   Other borrowings                                            127             --
   Federal Home Loan Bank of Atlanta advances                  698            282
                                                        ----------     ----------
          Total interest expense                             5,019          4,597
                                                        ----------     ----------

Net Interest Income                                          4,768          5,031

Provision for Loan Losses                                      100            200
                                                        ----------     ----------

Net Interest Income After Provision for Loan Losses          4,668          4,831
                                                        ----------     ----------

Non-interest Income:
    Service charges and fees                                   724            470
    Gain on sale of mortgage loans                              99            293
    Other, net                                                 200            141
                                                        ----------     ----------
          Total non-interest income, net                     1,023            904
                                                        ----------     ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                     <C>            <C>
Non-interest Expense:
    Employee compensation and benefits                       1,909          1,776
    Federal deposit insurance premium                           84             82
    Occupancy and equipment expense                            403            330
    Computer services                                          154             63
    Advertising and promotions                                 155            170
    Office supplies, postage, printing, etc.                   178            182
    Other                                                      517            390
                                                        ----------     ----------
          Total non-interest expense                         3,400          2,993
                                                        ----------     ----------

Income Before Income Taxes                                   2,291          2,742

Provision for Income Taxes                                     921          1,056
                                                        ----------     ----------

Net Income                                              $    1,370     $    1,686
                                                        ==========     ==========

Basic Earnings Per Share                                $     0.41     $     0.42
                                                        ==========     ==========

Weighted Average Shares Outstanding                      3,351,990      4,040,738
                                                        ==========     ==========

</TABLE>

See accompanying notes to consolidated financial statements.

                                        2
<PAGE>
<TABLE>
<CAPTION>
FirstSpartan Financial Corp. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For Three Months Ended September 30, 1999 and 1998
(In Thousands Except Share Data)




                                                                       Additional
                                              Common Stock               Paid-In        Retained         Treasury
                                           Shares         Amount         Capital        Earnings          Stock
                                         ---------      ----------     ----------      ----------      ----------
<S>                                      <C>            <C>            <C>             <C>             <C>
Balance, June 30, 1998                   4,253,160      $       44     $   87,624      $   52,662      $   (8,113)
                                         ---------      ----------     ----------      ----------      ----------

Net income                                    --              --             --             1,686            --
Unrealized gain on securities
 available-for-sale, net of taxes             --              --             --              --              --
                                         ---------      ----------     ----------      ----------      ----------
     Total comprehensive income               --              --             --             1,686            --
                                         ---------      ----------     ----------      ----------      ----------
Issuance of treasury stock to MRDP         177,215            --             (670)           --             8,113
ESOP stock committed for release              --              --              122            --              --
Purchase of treasury stock                (221,519)           --             --              --            (7,259)
Dividends ($0.15 per share)                   --              --             --              (614)           --
Prorata vesting of restricted stock           --              --             --              --              --
                                         ---------      ----------     ----------      ----------      ----------

Balance, September 30, 1998              4,208,856      $       44     $   87,076      $   53,734      $   (7,259)
                                         =========      ==========     ==========      ==========      ==========





Balance, June 30, 1999                   3,787,970      $       44     $   82,289      $   15,264      $  (20,955)
                                         ---------      ----------     ----------      ----------      ----------

Net income                                    --              --             --             1,370            --
Unrealized loss on securities
 available-for-sale, net of taxes             --              --             --              --              --
                                         ---------      ----------     ----------      ----------      ----------
     Total comprehensive income               --              --             --             1,370            --
                                         ---------      ----------     ----------      ----------      ----------
ESOP stock committed for release              --              --               96            --              --
Dividends ($0.20 per share)                   --              --             --              (665)           --
Prorata vesting of restricted stock           --              --             --              --              --
                                         ---------      ----------     ----------      ----------      ----------

Balance, September 30, 1999              3,787,970      $       44     $   82,385      $   15,969      $  (20,955)
                                         =========      ==========     ==========      ==========      ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                        Accumulated
                                                                           Other
                                                                        Comprehen-
                                         Unearned      Unallocated         sive           Total
                                         Restricted         ESOP          (Loss)       Stockholders'
                                           Stock           Stock          Income          Equity
                                        ----------      ----------      ----------      ----------
<S>                                     <C>             <C>             <C>             <C>
Balance, June 30, 1998                  $     --        $   (6,442)     $      (14)     $  125,761
                                        ----------      ----------      ----------      ----------

Net income                                    --              --              --             1,686
Unrealized gain on securities
 available-for-sale, net of taxes             --              --                34              34
                                        ----------      ----------      ----------      ----------
     Total comprehensive income               --              --                34           1,720
                                        ----------      ----------      ----------      ----------
Issuance of treasury stock to MRDP          (7,443)           --              --              --
ESOP stock committed for release              --               148            --               270
Purchase of treasury stock                    --              --              --            (7,259)
Dividends ($0.15 per share)                   --              --              --              (614)
Prorata vesting of restricted stock            372            --              --               372
                                        ----------      ----------      ----------      ----------

Balance, September 30, 1998             $   (7,071)     $   (6,294)     $       20      $  120,250
                                        ==========      ==========      ==========      ==========





Balance, June 30, 1999                  $   (4,660)     $   (5,851)     $      (90)     $   66,041
                                        ----------      ----------      ----------      ----------

Net income                                    --              --              --             1,370
Unrealized loss on securities
 available-for-sale, net of taxes             --              --               (60)            (60)
                                        ----------      ----------      ----------      ----------
     Total comprehensive income               --              --               (60)          1,310
                                        ----------      ----------      ----------      ----------
ESOP stock committed for release              --               147            --               243
Dividends ($0.20 per share)                   --              --              --              (665)
Prorata vesting of restricted stock            290            --              --               290
                                        ----------      ----------      ----------      ----------

Balance, September 30, 1999             $   (4,370)     $   (5,704)     $     (150)     $   67,219
                                        ==========      ==========      ==========      ==========


</TABLE>

                                        3

<PAGE>
<TABLE>
<CAPTION>
                        FirstSpartan Financial Corp. and Subsidiaries
                            Consolidated Statements of Cash Flows
                                    (Dollars In Thousands)
                                         (Unaudited)

                                                                         Three Months Ended
                                                                             September 30,
                                                                       ----------------------
                                                                          1999          1998
                                                                       --------      --------
<S>                                                                    <C>           <C>
Cash Flows from Operating Activities:
    Net income                                                         $  1,370      $  1,686
    Adjustments to reconcile net income to net
       cash provided by operating activities:
       Provision for loan losses                                            100           200
       Amortization of deferred income                                      (54)         (113)
       Amortization of loan servicing assets                                 45            11
       (Accretion) amortization of  (discounts) premiums
          on investment and mortgage-backed securities                       (1)            2
       Depreciation                                                         207           175
       Allocation of ESOP stock at fair value                               243           270
       Prorata vesting of restricted stock                                  290           372
       Decrease (increase) in loans held-for-sale                         4,489        (4,023)
       Increase in other assets                                          (5,480)         (567)
       Increase in other liabilities                                      2,275         1,296
                                                                       --------      --------
               Net cash provided by (used in) operating activities        3,484          (691)
                                                                       --------      --------

Cash Flows from Investing Activities:
     Net loan originations and principal collections                     (2,381)          654
     Purchase of loans                                                  (13,350)       (7,032)
     Purchase of investment securities available-for-sale                (1,012)         (317)
     Principal repayments and proceeds from maturities
        of mortgage-backed securities                                        12            11
     Proceeds from sale of real estate acquired
        in settlement of loans                                               42          --
     Purchase of property and equipment                                    (318)       (1,232)
                                                                       --------      --------
               Net cash used in investing activities                    (17,007)       (7,916)
                                                                       --------      --------

Cash Flows from Financing Activities:
     Net increase in deposits                                             1,997         7,172
     Dividends paid                                                        (665)         (614)
     Advances from Federal Home Loan Bank of Atlanta                     25,000        10,000
     Principal payment on other borrowings                              (35,000)         --
     Purchase of treasury stock                                            --          (7,259)
                                                                       --------      --------
               Net cash (used in) provided by financing activities     $ (8,668)     $  9,299
                                                                       --------      --------

</TABLE>

                                        4

<PAGE>
<TABLE>
<CAPTION>
                       FirstSpartan Financial Corp. and Subsidiaries
                           Consolidated Statements of Cash Flows
                                  (Dollars In Thousands)
                                        (Unaudited)

                                                                        Three Months Ended
                                                                           September 30,
                                                                       1999           1998
                                                                     --------      --------


<S>                                                                  <C>           <C>
Net (Decrease) Increase in Cash and Cash Equivalents                 $(22,191)     $    692

Cash and Cash Equivalents at Beginning of Period                       58,420        48,968
                                                                     --------      --------

Cash and Cash Equivalents at End of Period                           $ 36,229      $ 49,660
                                                                     ========      ========

Supplemental Disclosures of Cash Flow Information:
     Cash paid during the period for:
          Interest                                                   $  5,121      $  4,718
                                                                     ========      ========
          Income taxes                                               $   --        $    820
                                                                     ========      ========
     Transfers from loans to real estate acquired in
         settlement of loans                                         $     42      $   --
                                                                     ========      ========
     Change in unrealized (loss) gain on investment
         securities available-for-sale                               $    (96)     $     56
                                                                     ========      ========
     Change in deferred taxes related to unrealized
         loss (gain) on investment securities available-for-sale     $     36      $    (21)
                                                                     ========      ========
     Issuance of common stock to MRDP                                $   --        $  7,443
                                                                     ========      ========
</TABLE>

See accompanying notes to consolidated financial statements.


                                        5

<PAGE>
                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

1.       Basis of Presentation

         FirstSpartan  Financial  Corp.  ("FirstSpartan"  or the  "Company"),  a
         Delaware  corporation,  is the holding  company for First  Federal Bank
         ("First  Federal" or the "Bank") which is a federally  chartered  stock
         savings bank.

         The accompanying  consolidated financial statements of the Company 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 months ended September 30, 1999
         are not  necessarily  indicative  of the results to be expected for the
         year ending June 30, 2000. The  consolidated  financial  statements and
         notes thereto should be read in conjunction with the audited  financial
         statements  and  notes  thereto  contained  in  the  Annual  Report  to
         Stockholders for the year ended June 30, 1999.

2.       Earnings Per Share

         Earnings  per share  ("EPS")  has been  computed  based  upon  weighted
         average   common  shares   outstanding   of  3,351,990  and  4,040,738,
         respectively,  for the three months ended  September 30, 1999 and 1998.
         The  Company had no dilutive  securities  outstanding  during the three
         months ended September 30, 1999 and 1998; therefore, diluted EPS is the
         same as basic EPS for all periods presented.
















                                        6

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

Comparison of Financial Condition at September 30, 1999 and June 30, 1999

         Total  assets  were  $541.1  million at  September  30, 1999 and $545.7
         million at June 30,  1999,  a  decrease  of $4.6  million  or 1%.  This
         decrease resulted primarily from decreases of $22.2 million, or 38%, in
         cash and cash  equivalents  and $4.5  million  in loans  held-for-sale,
         offset by increases of $15.6 million,  or 4%, in loans receivable,  net
         and $5.2  million in other  assets.  The  majority of the  decrease was
         attributable  to uses of cash in investing and financing  activities of
         $17.0  million  and  $8.7  million,   respectively.   A  more  detailed
         reconciliation  may be found  in the  Consolidated  Statements  of Cash
         Flows for the three months ended September 30, 1999. Loans  receivable,
         net, increased  primarily as a result of an increase of $8.9 million in
         mortgage  loans  since  June 30,  1999.  Included  in the $8.9  million
         increase were  increases of $4.3 million in  construction  loans,  $4.3
         million in  commercial  mortgage  loans.  Loans  receivable,  net, also
         increased  due to a $2.7 million  increase in  non-mortgage  commercial
         loans and a $3.4 million increase in home equity loans. The increase in
         loans  receivable,  net,  was funded  primarily  through an increase in
         deposits and FHLB advances and a decrease in cash and cash equivalents.

         Deposit accounts  increased $2.0 million to $408.0 million at September
         30, 1999 from $406.0 million at June 30, 1999. The increase in deposits
         resulted  primarily  from newly opened branch  offices and, to a lesser
         extent,  interest  credited  to deposit  accounts  during  the  period.
         Advances  from the FHLB of  Atlanta  increased  $25.0  million to $59.0
         million at September 30, 1999 from $34.0 million at June 30, 1999.

         Stockholders'  equity  increased  by $1.2  million to $67.2  million at
         September  30,  1999 from $66.0  million at June 30,  1999.  Items that
         increased  stockholders'  equity were the  allocation  of shares in the
         amount of  $533,000  under the Bank's  Employee  Stock  Ownership  Plan
         ("ESOP") and  restricted  stock plan and net income of $1.4 million for
         the three months ended September 30, 1999.  Offsetting  these increases
         to stockholders' equity was payment of dividends of $664,000.

         Nonperforming assets decreased by $800,000 to $1.1 million at September
         30,  1999 from $1.9  million at June 30,  1999.  The  increase  was due
         primarily to a $600,000 decrease in nonaccrual loans.

Comparison of Operating Results for the Three Months Ended September 30, 1999
and September 30, 1998

         Net Income. Net income decreased $400,000 to $1.4 million for the three
         months ended  September 30, 1999 from $1.7 million for the three months
         ended  September 30, 1998.  The principal  item reducing net income for
         the quarter was the expected  reduction  in net interest  income due to
         payment of the special cash  distribution of $12.00 per share last June
         and share  repurchases  since  the  prior  year  quarter.  Other  items
         affecting  net income for the quarter were a decrease in the  provision
         for  loan  losses,   increased   non-interest   income  and   increased
         non-interest  expense.  Earnings per share for the current  quarter did
         not decrease in the same proportion as net income due to a reduction in

                                        7
<PAGE>
         average shares outstanding.  The share repurchases previously mentioned
         decreased   average   shares   outstanding   during   the   quarter  by
         approximately 479,000 shares as compared to the prior year quarter. The
         remainder of the share  reduction was  principally due to the effect of
         share  purchases  by the  Company's  ESOP with $4.3 million it received
         from the $12.00 special cash distribution.  Shares held in the ESOP but
         not yet awarded to  participants  are not  considered to be outstanding
         shares for  computation  of  earnings  per share  until such shares are
         awarded to participants.

         Net Interest Income.  Net interest income decreased to $4.8 million for
         the three  months  ended  September  30, 1999 from $5.0 million for the
         three months ended September 30, 1998. As discussed above, net interest
         income was reduced due to the payment of the special cash  distribution
         in June and the  repurchase  of  stock  during  the  first  and  second
         quarters  of  fiscal   year  1999.   The  total  cash  outlay  for  the
         distribution  was  approximately   $45.5  million  and  its  effect  is
         estimated to have decreased net income by  approximately  $390,000,  or
         23%, when comparing the current and prior year quarters.  The impact of
         the stock  repurchases  is  estimated to have  decreased  net income by
         approximately  $150,000,  or 9%, when  comparing  the current and prior
         year  quarters.  Growth in  interest-earning  assets  was  offset by an
         increase in interest-bearing liabilities and a decrease in net yield on
         interest-earning  assets  in  the  quarter  ended  September  30,  1999
         compared to the quarter ended September 30, 1998.

         The  average  balance of  interest-earning  assets  was $516.1  million
         during the quarter ended  September 30, 1999 compared to $502.9 million
         during  the  quarter  ended  September  30,  1998.  The  average  yield
         decreased  to 7.59% from 7.66% for the prior year  quarter due to lower
         market interest rates.

         The average balance of interest-bearing liabilities increased to $470.9
         million  during the three months ended  September  30, 1999 from $393.0
         million  during the three months ended  September  30, 1998,  more than
         offsetting  a  decrease  in  the  average   cost  of   interest-bearing
         liabilities  to 4.23% from 4.64%.  The  decrease in the average cost is
         attributable  to the  decrease  in  prevailing  market  rates since the
         quarter ended September 30, 1998.

         Net yield on interest-earning assets decreased to 3.70% for the quarter
         ended September 30, 1999 from 4.00% for the quarter ended September 30,
         1998 due primarily to the above mentioned decrease in the average yield
         on  interest-earning  assets and  increase  in the  average  balance of
         interest-bearing liabilities.

         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  in  accordance   with
         regulatory requirements.  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.

                                        8
<PAGE>
         The  provision  for loan losses was $100,000 for the three months ended
         September  30, 1999  compared to $200,000  for the three  months  ended
         September 30, 1998. The provision for loan losses  decreased due to the
         improvement in  non-performing  assets and loan charge-offs  during the
         current   quarter.   The  ratio  of   allowance   for  loan  losses  to
         non-performing loans has increased to 396.4% at September 30, 1999 from
         185.7% at  September  30,  1998  (and  190.4%  at June 30,  1999).  The
         allowance for loan losses represents an amount that management believes
         will be adequate to absorb  estimated losses inherent in the total loan
         portfolio  which  may  become  uncollectible.   Factors  considered  in
         assessing  the  adequacy  of  the  allowance  include  historical  loss
         experience, delinquency trends, characteristics of specific loan types,
         growth and composition of the loan  portfolios,  loans classified under
         OTS regulations, and other factors. Management deemed the allowance for
         loan  losses  to be  adequate  at  September  30,  1999.  Based  on the
         uncertainty in the estimation process,  however,  management's estimate
         of the allowance for loan losses may change in the near term.  Further,
         the  allowance  for loan  losses is subject to periodic  evaluation  by
         various  regulatory  authorities  and could be  adjusted as a result of
         their examinations.

         Non-interest Income.  Non-interest income increased by $119,000 to $1.0
         million for the three months ended September 30, 1999 from $904,000 for
         the three months ended September 30, 1998,  primarily as a result of an
         increase in fee income to $724,000 from $470,000 principally due to the
         growth in checking  accounts of  approximately  20%.  The growth in fee
         income,  however,  was offset by a  decrease  in gains from the sale of
         mortgage loans to $99,000 in the three months ended  September 30, 1999
         from  $293,000 in the three months ended  September  30, 1998 which was
         due  primarily  to the  larger  number of loan  refinancings  occurring
         during  the  period of lower  market  interest  rates in the prior year
         quarter.  The Bank  periodically  sells fixed-rate loans in response to
         interest rate changes,  liquidity  needs and other factors.  Management
         cannot predict whether there will be any such gains in the future.

         Non-interest  Expense.  Non-interest  expense was $3.4  million for the
         three months ended  September 30, 1999 compared to $3.0 million for the
         same period in 1998.  The increase  consisted  principally of increased
         occupancy and  personnel  costs and various  other  operating  expenses
         associated with the opening of new branch offices.

         Income  Taxes.  The provision  for income taxes  decreased  $135,000 to
         $921,000 for the three months ended  September 30, 1999 compared to the
         three months ended  September  30, 1998  primarily as a result of lower
         income before income taxes.

Liquidity and Capital Resources

         The Company's primary sources of funds are customer deposits,  proceeds
         from loan  principal and interest  payments,  sales of loans,  maturing
         securities,  FHLB of  Atlanta  advances,  and other  borrowings.  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.

                                        9

<PAGE>
         Federal  regulations  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 federal 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 September
         30, 1999,  cash and cash  equivalents  totaled $36.2 million,  or 7% of
         total    assets,    and    investment    securities    classified    as
         available-for-sale  with  maturities  of one year or less totaled $18.5
         million or 3% of total  assets.  At September  30, 1999,  the Bank also
         maintained  an  uncommitted  credit  facility with the FHLB of Atlanta,
         which provides for  immediately  available  advances up to an aggregate
         amount of  approximately  $91.4 million of which $59.0 million had been
         advanced.

         FirstSpartan  is  not  subject  to  any  separate   regulatory  capital
         requirements.  As of September 30, 1999, the Bank's regulatory  capital
         was in excess of all applicable regulatory  requirements.  At September
         30, 1999,  under  applicable  regulations,  the Bank's actual tangible,
         core and  risk-based  capital  ratios  were  10.8%,  10.8%  and  17.3%,
         respectively,   compared  to  requirements  of  1.5%,  3.0%  and  8.0%,
         respectively.

         At September  30,  1999,  the Company had loan  commitments  (excluding
         undisbursed  portions of interim  construction  loans) of approximately
         $4.8 million ($1.6 million at fixed rates ranging from 7.25% to 8.50%).
         In addition,  at September  30,  1999,  the unused  portion of lines of
         credit (principally variable-rate home equity lines of credit) extended
         by  the  Company  was  approximately  $52.6  million.  Furthermore,  at
         September 30, 1999, the Company had  certificates of deposit  scheduled
         to mature in one year or less of $225.6  million.  Based on  historical
         experience,   the   Company   anticipates   that  a  majority  of  such
         certificates of deposit will be renewed at maturity.

Year 2000

         The approach of the year 2000 ("Year 2000") presents significant issues
         for many financial,  information, and operational systems. Many systems
         in use today may not be able to interpret dates after December 31, 1999
         appropriately,  because such systems  allow only two digits to indicate
         the year in a date.  The  Year  2000  problem  may  occur  in  computer
         programs,   computer  hardware,  or  electronic  devices  that  utilize
         computer  chips  to  process  any  information   that  contains  dates.
         Therefore,  the issue is not limited to dates in computer  programs but
         is a  complex  combination  of  problems  that may  exist  in  computer
         programs, data files, computer hardware, and other devices essential to
         the operation of the  business.  Further,  companies  must consider the
         potential impact that Year 2000 may have on services  provided by third
         parties.

         Substantially  all of the  Year  2000  risk is  related  to the  Bank's
         activities.  The Bank has a formal Year 2000 plan which includes a Year
         2000 committee. The plan has been reviewed by senior management and the
         Board of  Directors.  Included  in the plan is a listing of all systems
         (whether in-house or  provided/supported by third parties) which may be
         impacted  by Year 2000 and a  categorization  of the  systems  by their
         potential  impact on Bank  operations.  The committee has received Year
         2000 plans from third parties identified during the assessment phase of
         the Year 2000 plan.  For systems that have been  classified as critical
         to the operations of the Bank,  contingency  plans have been developed.
         Each  contingency  plan was  developed  by  operational  personnel  who
         utilize  the   particular   system.   Contingency   plans  may  include
         utilization  of alternate  third party  vendors,  alternate  processing
         methods and  software,  or manual  processing.  The plans have  various
         activation dates (e.g., the date on which a third party processor fails
         to meet its Year  2000  compliance  deadline).  The  Bank's  Year  2000
         readiness is reviewed and monitored by the OTS.

                                       10
<PAGE>
         The Bank's core  processing  systems are outsourced  through a contract
         with The BISYS Group, Inc.  ("BISYS").  BISYS has developed a Year 2000
         plan and  provides  the Bank  with  periodic  updates.  BISYS  has also
         provided Year 2000 workshops,  whose objectives have been to assist the
         Bank in the  development  of its Year 2000 plan, to provide  updates on
         the BISYS Year 2000  plan,  and  training  on the use of the BISYS Year
         2000 test  facility,  whose  function is to allow BISYS clients to test
         their systems' compatibility with the BISYS system. BISYS has completed
         all program maintenance  associated with its Year 2000 plan and expects
         continued  testing up to January 1, 2000.  The Bank  established a Year
         2000 test facility and tested the processing  system from November 1998
         through  January  1999.  The test results were  satisfactory.  Like the
         Bank, BISYS Year 2000 activities are subject to OTS oversight.

         In  addition  to  addressing  its own  Year  2000  issues,  the Bank is
         continuing  to  assess  the  impact  of the  Year  2000 on  significant
         commercial  borrowers.  To date, based on written  representations from
         borrowers,   the  Bank  has  determined  that  substantially  all  such
         borrowers  have either (a) completed  Year 2000 systems  replacement or
         renovation  or (b)  developed  Year 2000  remediation  plans.  The Bank
         continues  to monitor  those  borrowers  whose  plans have not yet been
         completed.  Based upon  borrowers'  representations,  the Bank believes
         that its significant commercial borrowers will have Year 2000 compliant
         systems in place before  December 31, 1999.  However,  those  borrowers
         cannot give  assurance  that their  customers or suppliers will be Year
         2000  compliant  before  December  31,  1999.  The  Bank is  unable  to
         determine the impact upon  collections on these loans should either the
         borrowers'  representations  prove  inaccurate  or their  suppliers  or
         customers not be Year 2000 compliant.

         The Bank has recently organized a Year 2000 liquidity  committee.  This
         committee is in the process of estimating cash needs in the event there
         are unusually  high cash  withdrawals  at or near December 31, 1999. In
         addition  to  planning  for the  availability  of  liquid  funds,  this
         committee  will  also  develop  plans for  distribution  of cash to the
         Bank's offices and any other related plans.

         The  external  costs  associated  with the Bank's Year 2000  compliance
         incurred  to date have been less  than  $100,000.  Additional  external
         costs are expected to be less than $25,000. The Bank has not separately
         tracked internal costs associated with Year 2000 compliance. Such costs
         would consist  principally  of personnel  costs of employees on various
         committees,  a Year 2000 coordinator and operational personnel involved
         in system testing.  The majority of all required  hardware upgrades had
         been planned as a part of an overall  project  begun in 1997 to upgrade
         the  Bank's  computer  systems to  increase  efficiency  and  eliminate
         obsolescence of some components of the system.

         The Bank's  operations  are highly  dependent  on computer  systems and
         computer  hardware,  both  internal and those  provided  through  third
         parties.  Due to such a high  level  of  dependency  on  computers  and
         computer  systems,  the  failure of systems  due to Year 2000  problems
         could  have a  material  adverse  financial  impact  on the  Bank.  The
         following  risks  are  believed  by  management  to  present  the  most
         reasonably likely worst-case scenario:

                                       11
<PAGE>
         o        BISYS could experience  unforseen  system(s) failure resulting
                  in the  inability  to access  customer  accounts  and  process
                  transactions;
         o        Loss of utilities  could cause major  disruptions of business.
                  Should  the Bank lose  power,  it would  lose the  ability  to
                  operate  electronic  equipment  to access  customer  accounts.
                  Should telephone  service be disrupted the Bank would lose the
                  ability to communicate with BISYS,  which again would prohibit
                  access to customer accounts;
         o        Failures  in  the   payments   system  could  cause  a  severe
                  disruption to the Bank's business.  These failures could occur
                  in  the  Federal  Reserve  Banks,   correspondent   banks,  or
                  electronic  payments  clearing  houses.  These  failures could
                  cause processing  backlogs and could affect the Bank's ability
                  to process  customer  deposits and withdrawals as well as fund
                  loans;
         o        Failures  of the Bank's  correspondent  banks such as the FHLB
                  could impair the Bank's  liquidity  and the ability to process
                  certain payments; and,
         o        Loss of  customer  confidence  that  the  Bank or the  banking
                  system in  general  will be Year 2000  compliant  could  cause
                  excessive deposit withdrawals impairing the Bank's liquidity.

         Should  any or a  combination  of any of the above  scenarios  actually
         materialize,  the results  could be loss of revenue,  increased  costs,
         and/or impaired liquidity. It is not possible to estimate the extent of
         loss that may occur nor is it possible  to estimate  the length of time
         that it would take to remedy any problems encountered.

         There can be no  assurances  that the Bank,  BISYS,  other  third-party
         processors,  government  agencies,  utility  companies,   correspondent
         banks, or any other vendor upon which the Bank relies will  effectively
         address the Year 2000  problem.  Year 2000 failures by any of the above
         mentioned parties could cause a material adverse affect on the Bank and
         the Company.

Pending Legislation

         Pending  legislation  designed  to  modernize  the  regulation  of  the
         financial  services  industry  expands  the  ability  of  bank  holding
         companies to affiliate with other types of financial services companies
         such as insurance companies and investment banking companies.  However,
         the  legislation  provides  that  companies  that acquire  control of a
         single  savings  association  after  May 4,  1999  (or  that  filed  an
         application  for that purpose  after that date) are not entitled to the
         unrestricted activities formerly allowed for a unitary savings and loan
         holding company.  Rather, these companies will have authority to engage
         in the activities permitted "a financial holding company" under the new
         legislation, including insurance and securities-related activities, and
         the  activities  currently  permitted  for  multiple  savings  and loan
         holding  companies,  but generally not in  commercial  activities.  The
         authority  for  unrestricted  activities is  grandfathered  for unitary
         savings and loan holding companies,  such as the Company,  that existed
         prior  to  May  4,  1999.  However,   the  authority  for  unrestricted
         activities would not apply to any company that acquired the Company.

Item 3.           Quantitative and Qualitative Disclosures About Market Risk

         As of September  30, 1999,  there have been no material  changes in the
         quantitative and qualitative  disclosures  about market risks presented
         in the  Company's  Annual Report on Form 10-K for the fiscal year ended
         June 30, 1999.

                                       12
<PAGE>



                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES

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
                  -----------------
                  Not applicable



                                       13

<PAGE>
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****
                  (10) (l)   Loan Agreement with Central Carolina Bank and Trust
                             Company*****
                  (21)       Subsidiaries of the Registrant**
                  (27)       Financial Data Schedule

                  (b)      Reports on Form 8-K:

                           None.
--------------

*        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, 1998 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.
*****    Filed as an exhibit to the Registrant's Form 8-K dated June 9, 1999 and
         incorporated herein by reference.


                                       14

<PAGE>



                                   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:  November 12, 1999       By:         /s/Billy L. Painter
                                           -------------------
                                           Billy L. Painter
                                           President and Chief Executive Officer


Date:  November 12, 1999       By:         /s/R. Lamar Simpson
                                           -------------------
                                           R. Lamar Simpson
                                           Treasurer, Secretary and
                                           Chief Financial Officer



                                       15