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, 2000.


[   ]   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
 incorporation or organization)                           Identification No.)


             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: 3,811,333 shares as of February 8, 2001.

<PAGE>

                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>            <C>                                                                        <C>
Part I.    Financial Information

Item 1.    Financial Statements (unaudited)

              Consolidated Balance Sheets at December 31, 2000 and June 30, 2000           1

              Consolidated Statements of Income for the Six-Month Periods Ended
              December 31, 2000 and 1999                                                   2

              Consolidated Statements of Stockholders' Equity for the Six-Month
              Periods Ended December 31, 2000 and 1999                                     3

              Consolidated Statements of Cash Flows for the Three- and Six-Month
              Periods Ended December 31, 2000 and 1999                                   4-5

              Notes to Consolidated Financial Statements                                 6-8

Item 2.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                                        8-13

Item 3.    Quantitative and Qualitative Disclosures About Market Risk                     13

Part II.   Other Information

Item 1.    Legal Proceedings                                                              14

Item 2.    Changes in Securities and Use of Proceeds                                      14

Item 3.    Default Upon Senior Securities                                                 14

Item 4.    Submission of Matters to a Vote of Security Holders                            14

Item 5.    Other Information                                                              14

Item 6.    Exhibits and Reports on Form 8-K                                               15

Signatures                                                                                16
</TABLE>


<PAGE>

ITEM 1.  FINANCIAL STATEMENTS


                  FirstSpartan Financial Corp. and Subsidiaries

                           Consolidated Balance Sheets
                        (In Thousands, Except Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                      December 31,           June 30,
                                                                                         2000                  2000
                                                                                     ------------          ------------
<S>                                                                                <C>                   <C>
Assets
   Cash                                                                            $      15,136         $      13,375
   Federal funds sold and overnight interest-bearing deposits                              4,184                 7,231
                                                                                     ------------          ------------
             Total cash and cash equivalents                                              19,320                20,606
   Investment securities available-for-sale - at fair value (amortized cost:
      $30,803 and $34,239 at December 31, 2000 and June 30, 2000, respectively)           30,751                33,693
   Loans receivable, net                                                                 513,482               503,095
   Loans held-for-sale - at lower of cost or market (market value: $3,731
       and $1,967 at December 31, 2000 and June 30, 2000, respectively)                    3,664                 1,933
   Office properties and equipment, net                                                   10,411                10,241
   Federal Home Loan Bank of Atlanta stock  - at cost                                      4,100                 4,100
   Real estate acquired in settlement of loans                                               972                   478
   Other assets                                                                           12,003                11,511
                                                                                     ------------          ------------

                 Total Assets                                                      $     594,703         $     585,657
                                                                                     ============          ============


Liabilities and Stockholders' Equity

   Liabilities:
     Deposit accounts                                                              $     435,170         $     419,619
     Advances from Federal Home Loan Bank of Atlanta                                      81,000                82,000
     Other borrowings                                                                         --                 8,763
     Other liabilities                                                                     4,165                 5,891
                                                                                     ------------          ------------
                 Total liabilities                                                       520,335               516,273
                                                                                     ------------          ------------

   Stockholders' Equity:
     Preferred stock, $0.01 par value:
       Authorized - 250,000 shares;  none issued or outstanding
          at December 31, 2000 and June 30, 2000                                              --                    --
     Common stock, $0.01 par value:
       Authorized - 12,000,000 shares;  issued: 4,430,375 at December 31,
          2000 and June 30, 2000; outstanding:  3,811,333 and 3,720,270
          at December 31, 2000 and June 30, 2000, respectively                                44                    44
     Additional paid-in capital                                                           42,524                42,894
     Retained earnings                                                                    59,010                57,674
     Treasury stock - at cost (619,042 and 710,105 shares at December 31,
          2000 and June 30, 2000, respectively)                                          (19,289)              (22,126)
     Unearned restricted stock                                                            (2,923)               (3,502)
     Unallocated ESOP stock                                                               (4,965)               (5,261)
     Accumulated other comprehensive loss                                                    (33)                 (339)
                                                                                     ------------          ------------
                 Total stockholders' equity                                               74,368                69,384
                                                                                     ------------          ------------

                 Total Liabilities and Stockholders' Equity                        $     594,703         $     585,657
                                                                                     ============          ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                        1

<PAGE>

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

<TABLE>
<CAPTION>
                                                            Three Months Ended                     Six Months Ended
                                                               December 31,                          December 31,
                                                      --------------------------------     ---------------------------------
                                                            2000              1999              2000               1999
                                                      --------------    --------------     --------------    ---------------
<S>                                                      <C>             <C>                 <C>               <C>
Investment Income:
   Interest on loans                                     $   10,599      $    9,166          $   21,020        $   18,003
   Interest and dividends on investment securities,
     mortgage-backed securities, and other                      847             883               1,688             1,833
                                                         ----------      ----------          ----------        ----------
          Total investment income                            11,446          10,049              22,708            19,836
                                                         ----------      ----------          ----------        ----------

Interest Expense:

   Deposit accounts                                           5,236           4,173              10,244             8,367
   Other borrowings                                             145             104                 296               231
   Federal Home Loan Bank of Atlanta advances                 1,261             807               2,524             1,505
                                                         ----------      ----------          ----------        ----------
          Total interest expense                              6,642           5,084              13,064            10,103
                                                         ----------      ----------          ----------        ----------

Net Interest Income                                           4,804           4,965               9,644             9,733

Provision for Loan Losses                                       200             167                 300               267
                                                         ----------      ----------          ----------        ----------

Net Interest Income After Provision for Loan Losses           4,604           4,798               9,344             9,466
                                                         ----------      ----------          ----------        ----------

Non-interest Income:

    Service charges and fees                                    901             742               1,811             1,466
    Gain on sale of mortgage loans                               83              79                 162               178
    Other, net                                                  273             206                 498               406
                                                         ----------      ----------          ----------        ----------
          Total non-interest income, net                      1,257           1,027               2,471             2,050
                                                         ----------      ----------          ----------        ----------

Non-interest Expense:

    Employee compensation and benefits                        2,006           1,858               3,916             3,767
    Federal deposit insurance premium                            49              86                  98               170
    Occupancy and equipment expense                             380             376                 764               779
    Computer services                                           156             142                 328               296
    Advertising and promotions                                   76              94                 173               249
    Office supplies, postage, printing, etc                     142             179                 324               357
    Other                                                       632             588               1,391             1,105
                                                         ----------      ----------          ----------        ----------
          Total non-interest expense                          3,441           3,323               6,994             6,723
                                                         ----------      ----------          ----------        ----------

Income Before Income Taxes                                    2,420           2,502               4,821             4,793

Provision for Income Taxes                                      920             977               1,834             1,898
                                                         ----------      ----------          ----------        ----------

Net Income                                               $    1,500      $    1,525          $    2,987        $    2,895
                                                         ==========      ==========          ==========        ==========

Basic Earnings Per Share                                 $     0.45      $     0.45          $     0.89        $     0.86
                                                         ==========      ==========          ==========        ==========

Diluted Earnings Per Share                               $     0.43      $     0.45          $     0.88        $     0.86
                                                         ==========      ==========          ==========        ==========

Weighted Average Shares Outstanding - Basic               3,358,064       3,363,135           3,343,467         3,357,562
                                                         ==========      ==========          ==========        ==========

Weighted Average Shares Outstanding - Diluted             3,455,213       3,363,135           3,400,782         3,357,562
                                                         ==========      ==========          ==========        ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                        2

<PAGE>

                  FirstSpartan Financial Corp. and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
               For the Six Months Ended December 31, 2000 and 1999
                        (In Thousands, Except Share Data)



<TABLE>
<CAPTION>


                                                                 Common Stock            Additional
                                                           ------------------------       Paid-In        Retained       Treasury
                                                             Shares         Amount        Capital        Earnings         Stock
                                                           ---------      ---------      ---------       ---------       --------

<S>                                                        <C>            <C>            <C>             <C>             <C>
Balance, June 30, 1999                                     3,787,970      $      44      $  42,648       $  54,905       $ (20,955)
                                                           ---------      ---------      ---------       ---------       ---------

Net income                                                        --             --             --           2,895              --
Unrealized loss on securities
 available-for-sale, net of taxes                                 --             --             --              --              --
                                                           ---------      ---------      ---------       ---------       ---------
     Total comprehensive income                                   --             --             --           2,895              --
                                                           ---------      ---------      ---------       ---------       ---------
ESOP stock committed for release                                  --             --            154              --              --
Dividends ($0.45 per share)                                       --             --             --          (1,496)             --
Prorata vesting of restricted stock                               --             --             --              --              --
                                                           ---------      ---------      ---------       ---------       ---------

Balance December 31, 1999                                  3,787,970      $      44      $  42,802       $  56,304       $ (20,955)
                                                           =========      =========      =========       =========       =========


Balance, June 30, 2000                                     3,720,270      $      44      $  42,894       $  57,674       $ (22,126)
                                                           ---------      ---------      ---------       ---------       ---------

Net income                                                        --             --             --           2,987              --
Unrealized gain on securities
 available-for-sale, net of taxes                                 --             --             --              --              --
                                                           ---------      ---------      ---------       ---------       ---------
     Total comprehensive income                                   --             --             --           2,987              --
                                                           ---------      ---------      ---------       ---------       ---------
ESOP stock committed for release                                  --             --            296              --              --
Reissuance of treasury stock for stock options exercised      91,063             --           (666)             --           2,837
Dividends ($0.50 per share)                                       --             --             --          (1,651)             --
Prorata vesting of restricted stock                               --             --             --              --              --
                                                           ---------      ---------      ---------       ---------       ---------

Balance December 31, 2000                                  3,811,333      $      44      $  42,524       $  59,010       $ (19,289)
                                                           =========      =========      =========       =========       =========
</TABLE>

<TABLE>
<CAPTION>
                                                                                       Accumulated
                                                                                          Other
                                                           Unearned     Unallocated     Comprehen-         Total
                                                          Restricted       ESOP            sive        Stockholders'
                                                             Stock         Stock          (Loss)          Equity
                                                           ---------    -----------      ---------       ---------

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

Net income                                                        --            --              --           2,895
Unrealized loss on securities
 available-for-sale, net of taxes                                 --            --             (95)            (95)
                                                           ---------     ---------       ---------       ---------
     Total comprehensive income                                   --            --             (95)          2,800
                                                           ---------     ---------       ---------       ---------
ESOP stock committed for release                                  --           295              --             449
Dividends ($0.45 per share)                                       --            --              --          (1,496)
Prorata vesting of restricted stock                              579            --              --             579
                                                           ---------     ---------       ---------       ---------

Balance December 31, 1999                                  $  (4,081)    $  (5,556)      $    (185)      $  68,373
                                                           =========     =========       =========       =========


Balance, June 30, 2000                                     $  (3,502)    $  (5,261)      $    (339)      $  69,384
                                                           ---------     ---------       ---------       ---------

Net income                                                        --            --              --           2,987
Unrealized gain on securities
 available-for-sale, net of taxes                                 --            --             306             306
                                                           ---------     ---------       ---------       ---------
     Total comprehensive income                                   --            --             306           3,293
                                                           ---------     ---------       ---------       ---------
ESOP stock committed for release                                  --           296              --             592
Reissuance of treasury stock for stock options exercised          --            --              --           2,171
Dividends ($0.50 per share)                                       --            --              --          (1,651)
Prorata vesting of restricted stock                              579            --              --             579
                                                           ---------     ---------       ---------       ---------

Balance December 31, 2000                                  $  (2,923)    $  (4,965)      $     (33)      $  74,368
                                                           =========     =========       =========       =========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                  FirstSpartan Financial Corp. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                Six Months Ended
                                                                                   December 31,
                                                                           -----------------------------
                                                                               2000             1999
                                                                           ------------     ------------
<S>                                                                        <C>             <C>
Cash Flows from Operating Activities:
    Net income                                                             $      2,987    $      2,895
    Adjustments to reconcile net income to net
       cash provided by operating activities:
       Provision for loan losses                                                    300             267
       Deferred income tax (benefit) provision                                     (155)             60
       Accretion (amortization) of deferred income                                   57             (85)
       Amortization of loan servicing assets                                        112              95
       Accretion of  discounts on investment securities                              --             (21)
       Depreciation                                                                 400             415
       Allocation of ESOP stock at fair value                                       592             449
       Prorata vesting of restricted MRDP stock                                     579             579
       Gain on disposal of property and equipment                                    (3)             --
       Gain on sale of real estate acquired in settlement of loans                  (25)            (20)
       (Increase) decrease in loans held-for-sale                                (1,731)          7,062
       Increase in other assets                                                    (604)         (5,772)
       (Decrease) increase in other liabilities                                  (1,758)            892
                                                                             -----------     -----------
               Net cash provided by operating activities                            751           6,816
                                                                             -----------     -----------

Cash Flows from Investing Activities:

     Net loan originations and principal collections                             10,989          (4,103)
     Purchase of loans                                                          (22,282)        (33,979)
     Purchase of investment securities available-for-sale                        (5,566)        (10,216)
     Proceeds from maturities of investment securities available-for-sale         9,001              --
     Proceeds from sale of real estate acquired in settlement of loans              300             349
     Improvements on real estate acquired in settlement of loans                   (220)             --
     Purchase of property and equipment                                            (575)           (471)
     Proceeds from sale of property and equipment                                     8              --
                                                                             -----------     -----------
               Net cash used in investing activities                             (8,345)        (48,420)
                                                                             -----------     -----------

Cash Flows from Financing Activities:

     Net increase in deposits                                                    15,551           1,520
     Dividends paid                                                              (1,651)         (1,496)
     Advances from Federal Home Loan Bank of Atlanta                              2,000          37,000
     Repayment of advances from Federal Home Loan Bank of Atlanta                (3,000)        (10,000)
     Other borrowings                                                               563           8,910
     Proceeds from exercise of stock options                                      2,171              --
     Principal payments on other borrowings                                      (9,326)        (35,000)
                                                                             -----------     -----------
               Net cash provided by financing activities                          6,308             934
                                                                             -----------     -----------
</TABLE>

                                        4

<PAGE>

                  FirstSpartan Financial Corp. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                            December 31,
                                                                                        2000            1999
                                                                                    ------------    -------------
<S>                                                                                 <C>             <C>
Net Decrease in Cash and Cash Equivalents                                           $     (1,286)   $    (40,670)

Cash and Cash Equivalents at Beginning of Period                                          20,606          58,420
                                                                                      -----------     -----------

Cash and Cash Equivalents at End of Period                                          $     19,320    $     17,750
                                                                                      ===========     ===========

Supplemental Disclosures of Cash Flow Information:
     Cash paid during the period for:
          Interest                                                                  $     12,900    $      9,477
                                                                                      ===========     ===========
          Income taxes                                                              $      2,354    $        722
                                                                                      ===========     ===========
     Transfers from loans to real estate acquired in settlement of loans            $        549    $        164
                                                                                      ===========     ===========
     Change in unrealized loss on investment securities available-for-sale          $        493    $       (153)
                                                                                      ===========     ===========
     Change in deferred taxes related to unrealized loss on
         investment securities available-for-sale                                   $       (187)   $         58
                                                                                      ===========     ===========
     Tax benefit from exercise of stock options                                     $        415    $         --
                                                                                      ===========     ===========
</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"), a federally  chartered stock savings
           bank.

           The  accompanying  consolidated  financial  statements of the Company
           have been prepared in accordance with the  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 six-month  periods ended
           December 31, 2000 are not necessarily indicative of the results to be
           expected   for  the  year  ending  June  30,  2001.   The   unaudited
           consolidated financial statements and notes thereto should be read in
           conjunction with the audited  financial  statements and notes thereto
           contained  in the Annual  Report on Form 10-K for the year ended June
           30, 2000.

2.         Pending Merger

           On  September  5, 2000,  the  Company and BB&T  Corporation  ("BB&T")
           entered  into  an   Agreement   and  Plan  of   Reorganization   (the
           "Agreement")  pursuant to which the Company  will merge with and into
           BB&T.  Pursuant  to the  terms of the  Agreement,  each  share of the
           Company's  common stock issued and  outstanding at the effective time
           of the merger will become and be converted  into the right to receive
           one share of BB&T  common  stock.  The  merger  was  approved  by the
           Company's  stockholders  on January  17,  2001.  Consummation  of the
           merger is expected in March 2001.

           In connection with the Agreement, the Company granted to BB&T a stock
           option pursuant to a stock option  agreement dated as of September 5,
           2000, which under certain defined circumstances, would enable BB&T to
           purchase  740,300  shares of the Company's  common stock,  subject to
           adjustment, at a price of $21.25 per share.


                                       6
<PAGE>



3.         Earnings Per Share

           The following schedule  reconciles the numerators and denominators of
           the basic and diluted earnings per share ("EPS") computations for the
           three-  and  six-month  periods  ended  December  31,  2000 and 1999.
           Diluted common shares arise from the  potentially  dilutive effect of
           the Company's stock options outstanding.

<TABLE>
<CAPTION>
                                                           Quarter Ended                Six Months Ended
                                                            December 31,                   December 31,
                                                    ------------------------------  --------------------------
                                                       2000            1999            2000           1999
                                                    ----------      ----------      ----------      ----------
           <S>                                      <C>             <C>             <C>             <C>
           Basic EPS:
           Net income                               $1,500,000      $1,525,000      $2,987,000      $2,895,000
           Average common shares outstanding         3,358,064       3,363,135       3,343,467       3,357,562
                                                    ----------      ----------      ----------      ----------
           Earnings per share                       $     0.45      $     0.45      $     0.89      $     0.86
                                                    ==========      ==========      ==========      ==========

           Diluted EPS:
           Net income                               $1,500,000      $1,525,000      $2,987,000      $2,895,000
                                                    ----------      ----------      ----------      ----------
           Average common shares outstanding         3,358,064       3,363,135       3,343,467       3,357,562
           Dilutive effect of stock options             97,149              --          57,315              --
                                                    ----------      ----------      ----------      ----------
           Average dilutive shares outstanding       3,455,213       3,363,135       3,400,782       3,357,562
                                                    ----------      ----------      ----------      ----------
           Earnings per share                       $     0.43      $     0.45      $     0.88      $     0.86
                                                    ==========      ==========      ==========      ==========
           </TABLE>


4.         Stock Options

           The  following  is an analysis of stock  option  activity for the six
           months ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                       2000                                     1999
                                     ---------------------------------------    -----------------------------------
                                                                    Weighted                              Weighted
                                      Options        Options        Average      Options       Options    Average
                                     Available         Out-         Exercise    Available       Out-      Exercise
                                     for Grant      standing         Price      for Grant     standing     Price
                                     ---------      --------       ---------    ---------     --------   ---------
           <S>                         <C>          <C>           <C>            <C>           <C>       <C>
           Balance, June 30            16,808       426,230       $   21.63      29,245        413,793   $   21.73

           Granted                         --            --              --          --             --          --
           Exercised                       --      (108,926)          21.75          --             --          --
           Forfeited                    5,146        (5,146)          21.75          --             --          --
                                       ------      --------                      ------         ------
           Balance, December 31        21,954       312,158           21.61      29,245        413,793       21.73
                                       ======       =======                      ======        =======       =====
</TABLE>

                                        7

<PAGE>

5.         Recently Issued Accounting Standards and Guidance

           In June 1998,  the  Financial  Accounting  Standards  Board  ("FASB")
           issued Statement of Financial  Accounting  Standard ("SFAS") No. 133,
           Accounting for Derivative  Instruments and Hedging  Activities.  This
           statement, as amended, establishes accounting and reporting standards
           for derivative  instruments and for hedging  activities.  It requires
           that  an  entity  recognize  all  derivatives  as  either  assets  or
           liabilities  in the balance  sheet and measure those  instruments  at
           fair  value.  The  accounting  for  changes  in the  fair  value of a
           derivative (that is, gains and losses) depends on the intended use of
           the  derivative.  The Company  adopted  this  statement as of July 1,
           2000.  The  adoption  of SFAS No. 133 had no effect on the  Company's
           financial position or results of operations.

           In December  1999, the  Securities  and Exchange  Commission  ("SEC")
           issued Staff Accounting Bulletin ("SAB") No. 101, Revenue Recognition
           in Financial  Statements  which  summarizes  certain views of the SEC
           staff related to the  application  of generally  accepted  accounting
           principles   with  respect  to  revenue   recognition   in  financial
           statements.  SAB No. 101, as amended,  must be adopted by the Company
           no later than April 1, 2001.  The Company  believes  that adoption of
           SAB No. 101 will not  materially  affect its  financial  position  or
           results of  operations.

           In  September  2000,  the FASB issued SFAS No.  140,  Accounting  for
           Transfers and Servicing of Financial  Assets and  Extinguishments  of
           Liabilities.  This new  statement  replaces  SFAS No.125 and provides
           further  standards on  accounting  and  reporting  for  transfers and
           servicing of financial  assets and  extinguishments  of  liabilities.
           SFAS No. 140 is effective  for  transfers  occurring  after March 31,
           2001 and for disclosures relating to securitization  transactions and
           collateral  for fiscal  years ending  after  December  15, 2000.  The
           Company  has not  completed  the  analysis  of the  impact  that this
           standard may have on the Company's financial statements.

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

Private Securities Litigation Reform Act Safe Harbor Statement

           This Quarterly Report contains forward-looking  statements within the
           meaning of the federal  securities  laws.  These  statements  are not
           historical  facts,  rather  statements based on the Company's current
           expectations  regarding its business  strategies  and their  intended
           results and its future  performance.  Forward-looking  statements are
           preceded  by  terms  such as  "expects,"  "believes,"  "anticipates,"
           "intends," and similar expressions.

           Forward-looking  statements are not guarantees of future performance.
           Numerous  risks and  uncertainties  could cause the Company's  actual
           results,  performance,  and  achievements to be materially  different
           from those  expressed or implied by the  forward-looking  statements.
           Factors that may cause or  contribute to these  differences  include,
           without limitation, general economic conditions, including changes in
           market  interest rates and changes in monetary and fiscal policies of
           the federal government; legislative and regulatory changes; and other
           factors  disclosed  periodically  in the  Company's  filings with the
           Securities and Exchange Commission.

                                       8


<PAGE>


           Because of the risks and  uncertainties  inherent in  forward-looking
           statements,  readers are  cautioned  not to place  undue  reliance on
           them,  whether included in this report or made elsewhere from time to
           time  by the  Company  or on  its  behalf.  The  Company  assumes  no
           obligation to update any forward- looking statements.

Comparison of Financial Condition at December 31, 2000 and June 30, 2000

           Total  assets  were $594.7  million at  December  31, 2000 and $585.7
           million at June 30,  2000,  an  increase  of $9.0  million or 2%. The
           primary component of this increase was $10.4 million, or 2%, in loans
           receivable,  net. Loans  receivable,  net,  increased  primarily as a
           result of an  increase of $5.0  million in mortgage  loans since June
           30, 2000.  Included in the $5.0 million  increase  were  increases of
           $5.8  million in  commercial  mortgage  loans and $800,000 in one- to
           four-family  mortgage  loans  and land  development  loans  combined,
           offset by a decline of $1.6  million  in  construction  loans.  Loans
           receivable,  net, also  increased due to increases of $3.5 million in
           non-mortgage commercial loans and $1.5 million in home equity loans.

           Deposit  accounts  increased  $15.6  million  to  $435.2  million  at
           December 31, 2000 from $419.6 million at June 30, 2000 primarily as a
           result of an increase in certificates of deposit.

           Stockholders'  equity  increased by $5.0 million to $74.4  million at
           December  31, 2000 from $69.4  million at June 30,  2000.  Items that
           increased  stockholders'  equity were the allocation of shares in the
           amount of $1.2 million under the Bank's Employee Stock Ownership Plan
           ("ESOP") and  restricted  stock plan,  net income of $3.0 million for
           the six months ended  December 31, 2000, and proceeds of $2.2 million
           from shares issued in connection  with the exercise of stock options.
           Offsetting these increases to stockholders' equity was the payment of
           cash dividends of $1.6 million.

           Non-performing  assets increased by $2.9 million to $6.8 million,  or
           1.15% of total  assets,  at December 31, 2000 from $3.9  million,  or
           0.67% of  total  assets,  at June  30,  2000.  The  increase  was due
           primarily  to an  increase  of $2.4  million in loans on  non-accrual
           status and $490,000 in real estate acquired in settlement of loans.

Comparison of Operating Results for the Three Months Ended December 31, 2000 and
December 31, 1999

           Net Income.  Net income was $1.5  million for the three  months ended
           December 31, 2000 and 1999.  An increase in  non-interest  income was
           offset by a  decrease  in net  interest  income  and an  increase  in
           non-interest expense.

           Net Interest  Income.  Net interest income  decreased by $161,000 for
           the three months ended  December 31, 2000 from the three months ended
           December 31, 1999.  Investment  income increased by $1.4 million,  or
           14%, to $11.4  million for the three months  ended  December 31, 2000
           from $10.0 million for the three months ended  December 31, 1999. The
           increase in  investment  income was offset by an increase in interest
           expense of $1.5 million, or 29%, to $6.6 million for the three months
           ended  December 31, 2000 from $5.1 million for the three months ended
           December 31, 1999.

                                        9


<PAGE>

           The average  balance of  interest-earning  assets was $562.9  million
           during the quarter ended December 31, 2000 compared to $522.5 million
           during the  quarter  ended  December  31,  1999.  The  average  yield
           increased  to 8.13%  from  7.69% for the prior  year  quarter  due to
           higher market interest rates in recent quarters.

           The average  balance of  interest-bearing  liabilities  increased  to
           $519.0  million  during the three months ended December 31, 2000 from
           $480.4  million  during the three months ended December 31, 1999. The
           average cost of interest-bearing  liabilities increased to 5.08% from
           4.24% for the prior year quarter due to higher market  interest rates
           in recent  quarters.  Due to the inability to predict future interest
           rates,  the amount of future  increases  in the cost of deposits  and
           borrowings, if any, cannot be quantified.

           Net  yield on  interest-earning  assets  decreased  to 3.41%  for the
           quarter  ended  December  31, 2000 from 3.80% for the  quarter  ended
           December 31, 1999.

           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.  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
           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 non-performing  assets  (non-accrual  loans,  accruing loans
           contractually  past due 90 days or more, and real estate  acquired in
           settlement  of loans)  because  classified  assets  include  not only
           non-performing  assets  but also  performing  assets  that  otherwise
           exhibit, in management's judgment, potential credit weaknesses.

           The provision for loan losses was $200,000 for the three months ended
           December 31, 2000 and  $167,000  for the three months ended  December
           31, 1999.  Non-performing  assets  increased  primarily  because of a
           related  group  of  one-  to  four-family  mortgage  loans,  however,
           management did not believe that an increase in the provision for loan
           losses was  warranted  for these loans.  See  Comparison of Financial
           Condition at December 31, 2000 and June 30, 2000.  Management  deemed
           the  allowance  for loan losses to be adequate at December  31, 2000.
           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.

           The allowance  for loan losses  increased to $3.7 million at December
           31,  2000 from $3.5  million at June 30,  2000 and was 0.68% of gross
           loans  receivable  at December 31, 2000 compared to 0.64% at June 30,
           2000. The ratio of allowance for loan losses to non-performing  loans
           decreased to 63.11% at December 31, 2000 from 100.9% at June 30, 2000
           due  primarily  to the  increase in  non-performing  loans  described
           above.

                                       10


<PAGE>

           Non-interest  Income.  Non-interest  income increased to $1.3 million
           for the three  months  ended  December 31, 2000 from $1.0 million for
           the three months ended  December  31, 1999.  Fee income  increased to
           $901,000  from  $742,000  principally  due to the growth in fee-based
           products and certain fee increases.

           Non-interest  Expense.  Non-interest expense was $3.4 million for the
           three months ended December 31, 2000 compared to $3.3 million for the
           same period in 1999.  Non-interest expense increased primarily due to
           expenses  incurred in  connection  with the pending  merger with BB&T
           Corporation  (which was approved by stockholders on January 17, 2000)
           and due to  increased  expense  associated  with the  employee  stock
           ownership plan (the Company's  principal  retirement benefit plan) in
           which  the  Company's   average  stock  price  is  a  factor  in  the
           determination  of the  plan's  expense  each  period.  The  Company's
           average stock price increased substantially for the current three and
           six- month periods.

           Income  Taxes.  The  provision  for income taxes was $920,000 for the
           three  months ended  December  31, 2000  compared to $977,000 for the
           three months ended December 31, 1999.

Comparison of Operating  Results for the Six Months Ended  December 31, 2000 and
December 31, 1999

           Net Income.  Net income  increased to $3.0 million for the six months
           ended  December  31, 2000 from $2.9  million for the six months ended
           December 31, 1999. An increase in non-interest income was offset by a
           decrease  in net  interest  income and an  increase  in  non-interest
           expense.

           Net Interest Income. Net interest income decreased by $89,000 for the
           six months ended December 31, 2000 from the six months ended December
           31, 1999.  Investment  income  increased by $2.9 million,  or 15%, to
           $22.7  million for the six months ended  December 31, 2000 from $19.8
           million for the six months ended  December 31, 1999.  The increase in
           investment  income was offset by an increase  in interest  expense of
           $3.0  million,  or 30%,  to $13.1  million  for the six months  ended
           December  31,  2000  from  $10.1  million  for the six  months  ended
           December 31, 1999.

           The average  balance of  interest-earning  assets was $559.8  million
           during the six months  ended  December  31,  2000  compared to $519.3
           million  during the six months ended  December 31, 1999.  The average
           yield  increased to 8.11% from 7.64% for the prior year period due to
           higher market interest rates in recent quarters.

           The average  balance of  interest-bearing  liabilities  increased  to
           $516.2  million  during the six months  ended  December 31, 2000 from
           $475.7  million  during the six months ended  December 31, 1999.  The
           average cost of interest-bearing  liabilities increased to 5.02% from
           4.21% for the prior year quarter due to higher market  interest rates
           in recent  quarters.  Due to the inability to predict future interest
           rates,  the future  amount of  increases  in the cost of deposits and
           borrowings, if any, cannot be quantified.

                                       11


<PAGE>

           Net yield on  interest-earning  assets decreased to 3.45% for the six
           months  ended  December  31, 2000 from 3.75% for the six months ended
           December 31, 1999.

           Provision for Loan Losses. The provision for loan losses was $300,000
           for the six months ended  December 31, 2000  compared to $267,000 for
           the six months ended  December 31, 1999.  See Comparison of Operating
           Results for the Three Months Ended December 31, 2000 and December 31,
           1999 - Provision  for Loan Losses for a  discussion  of  management's
           process for determining the provision for loan losses.

           Non-interest  Income.  Non-interest  income increased to $2.5 million
           for the six months ended  December 31, 2000 from $2.1 million for the
           six months  ended  December 31,  1999.  Fee income  increased to $1.8
           million from $1.5 million  principally due to the growth in fee-based
           products and certain fee increases.

           Non-interest  Expense.  Non-interest expense was $7.0 million for the
           six months ended  December 31, 2000  compared to $6.7 million for the
           same period in 1999.  Non-interest expense increased primarily due to
           expenses  incurred in  connection  with the pending  merger with BB&T
           Corporation  (which was approved by stockholders on January 17, 2000)
           and due to  increased  expense  associated  with the  employee  stock
           ownership plan (the Company's  principal  retirement benefit plan) in
           which  the  Company's   average  stock  price  is  a  factor  in  the
           determination  of the  plan's  expense  each  period.  The  Company's
           average stock price increased substantially for the current three and
           six-month periods.

           Income Taxes. The provision for income taxes was $1.8 million for the
           six months ended  December 31, 2000  compared to $1.9 million for the
           six months ended December 31, 1999.

Liquidity and Capital Resources

           The  Company's  primary  sources  of  funds  are  customer  deposits,
           proceeds from principal and interest payments from loans, the sale 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.  The  Company  and the Bank  generally
           maintain   sufficient   cash  and  short-term   investments  to  meet
           short-term  liquidity  needs.  At December  31,  2000,  cash and cash
           equivalents  totaled  $19.3  million,  or 3%  of  total  assets,  and
           investment   securities   classified   as   available-for-sale   with
           maturities of one year or less totaled $20.5 million,  or 3% of total
           assets. At December 31, 2000, 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   $148.2  million  of  which  $81.0  million  had  been
           advanced.

                                       12


<PAGE>

           FirstSpartan  is not  subject  to  any  separate  regulatory  capital
           requirements.  As of December 31, 2000, the Bank's regulatory capital
           was in excess of all applicable regulatory requirements.  At December
           31, 2000, under applicable  regulations,  the Bank's actual tangible,
           core, and risk-based  capital  ratios were 10.5%,  10.5%,  and 15.9%,
           respectively,  compared  to  requirements  of 1.5%,  3.0%,  and 8.0%,
           respectively.

           At December 31,  2000,  the Company had loan  commitments  (excluding
           undisbursed  portions of interim construction loans) of approximately
           $3.0 million  ($1.6 at fixed rates  ranging  from 7.125% to 10%).  In
           addition, at December 31, 2000, the unused portion of lines of credit
           (principally  variable- rate home equity lines of credit) extended by
           the Company was approximately $63.2 million. Furthermore, at December
           31, 2000, the Company had certificates of deposit scheduled to mature
           in  one  year  or  less  of  $241.1  million.   Based  on  historical
           experience,   the  Company   anticipates  that  a  majority  of  such
           certificates of deposit will be renewed at maturity.

Item 3.       Quantitative and Qualitative Disclosures About Market Risk

           As of December 31, 2000,  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, 2000.

                                       13


<PAGE>



                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES

Part II.  Other Information

Item 1.       Legal Proceedings
              -----------------
              The  Company  is  not   involved   in  any  pending   legal
              proceedings other than routine legal proceedings  occurring
              in the  ordinary  course of business.  Management  believes
              that such routine legal proceedings,  in the aggregate, are
              not  material  to  the  Company's  financial  condition  or
              results of operations.

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

                                       14


<PAGE>

<TABLE>
<CAPTION>


Item 6.     Exhibits and Reports on Form 8-K
            --------------------------------
<S>             <C>           <C>
            (a) Exhibits

                 (2) (a)      Agreement and Plan of Reorganization by and Between BB&T
                              Corporation and FirstSpartan Financial Corp.*******
                 (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)      Severance Agreement with J. Timothy Camp*****
                (21)          Subsidiaries of the Registrant**
                (27)          Financial Data Schedule

        (b) Reports on Form 8-K:
            None.
</TABLE>



*          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  December 31, 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.

*****      Filed as an exhibit  to the  Registrant's  Form 10-Q for the  quarter
           ended December 31, 1999 and incorporated herein by reference.

******     Filed as an exhibit  to the  Registrant's  Form 10-Q for the  quarter
           ended March 31, 2000 and incorporated herein by reference.

******     Filed as an exhibit to the  Registrant's  Current Report on Form 8-K,
           filed on September 8, 2000, and incorporated herein by reference.

                                       15


<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:                       By: /S/ Billy L. Painter
     ---------------            ------------------------------------------------
                                Billy L. Painter
                                President and Chief Executive Officer


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


                                       16