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, 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 February 8, 2000.
<PAGE>
                  FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES


                               Table of Contents


                                                                            Page
                                                                            ----
Part I.  Financial Information

Item 1.  Financial Statements (unaudited)

             Consolidated Balance Sheets at December 31, 1999 and June
             30, 1999                                                          1

             Consolidated  Statements  of Income  for the  Three-  and
             Six-Month Periods Ended December 31, 1999 and 1998                2

             Consolidated  Statements of Stockholders'  Equity for the
             Six-Month Periods Ended December 31, 1999 and 1998                3

             Consolidated  Statements  of Cash Flows for the Six-Month
             Periods Ended December 31, 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                                7-13

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               14-15

Item 5.  Other Information                                                    15

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

Signatures                                                                    16
<PAGE>
ITEM 1.  FINANCIAL STATEMENTS
-------  --------------------
<TABLE>
<CAPTION>
               FirstSpartan Financial Corp. and Subsidiaries
                        Consolidated Balance Sheets
                           (Dollars In Thousands)
                                (Unaudited)

                                                                                     December 31,      June 30,
Assets                                                                                  1999              1999
                                                                                    -----------      -----------
<S>                                                                                 <C>              <C>
   Cash                                                                             $    12,948      $    14,638
   Federal funds sold and overnight interest-bearing deposits                             4,802           43,782
                                                                                    -----------      -----------
             Total cash and cash equivalents                                             17,750           58,420
   Investment securities available-for-sale - at fair value (amortized cost:
      $33,725 and $23,489 at December 31, 1999 and June 30, 1999, respectively)          33,427           23,344
   Mortgage-backed securities held-to-maturity - at amortized cost (fair value:
      $40 and $55 at December 31, 1999 and June 30, 1999, respectively)                      39               54
   Loans receivable, net                                                                472,917          435,181
   Loans held-for-sale - at lower of cost or market (market value: $1,944
       and $9,089 at December 31, 1999 and June 30 1999, respectively)                    1,922            8,984
   Office properties and equipment, net                                                  10,426           10,370
   Federal Home Loan Bank of Atlanta stock  - at cost                                     3,612            3,612
   Accrued interest receivable                                                            3,847            3,203
   Real estate acquired in settlement of loans                                              183              348
   Other assets                                                                           7,258            2,209
                                                                                    -----------      -----------

               Total Assets                                                         $   551,381      $   545,725
                                                                                    ===========      ===========


Liabilities and Stockholders' Equity

   Liabilities:
     Deposit accounts                                                               $   407,531      $   406,011
     Advances from borrowers for taxes and insurance                                        411            1,004
     Advances from Federal Home Loan Bank of Atlanta                                     61,000           34,000
     Other borrowings                                                                     8,910           35,000
     Other liabilities                                                                    5,156            3,669
                                                                                    -----------      -----------
               Total liabilities                                                        483,008          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 December 31, 1999 and June 30, 1999                                           --               --
     Common stock, $0.01 par value:
       Authorized - 12,000,000 shares;  issued: 4,430,375 at December 31,
          1999 and June 30, 1999; outstanding: 3,787,970
          at December 31, 1999 and June 30, 1999                                             44               44
     Additional paid-in capital                                                          42,802           42,648
     Retained earnings                                                                   56,304           54,905
     Treasury stock - at cost (642,405 shares at
          December 31, 1999 and June 30, 1999)                                          (20,955)         (20,955)
     Unearned restricted stock                                                           (4,081)          (4,660)
     Unallocated ESOP stock                                                              (5,556)          (5,851)
     Accumulated other comprehensive loss                                                  (185)             (90)
                                                                                    -----------      -----------
               Total stockholders' equity                                                68,373           66,041
                                                                                    -----------      -----------

               Total Liabilities and Stockholders' Equity                           $   551,381      $   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              Six Months Ended
                                                               December 31,                   December 31,
                                                        -------------------------     -------------------------
                                                            1999         1998           1999              1998
                                                        ----------     ----------     ----------     ----------
<S>                                                     <C>            <C>            <C>            <C>
Investment Income:
   Interest on loans                                    $    9,166     $    8,791     $   18,003     $   17,328
   Interest and dividends on investment securities,
     mortgage-backed securities, and other                     883            893          1,833          1,984
                                                        ----------     ----------     ----------     ----------
          Total investment income                           10,049          9,684         19,836         19,312
                                                        ----------     ----------     ----------     ----------

Interest Expense:
   Deposit accounts                                          4,173          4,273          8,367          8,588
   Other borrowings                                            104           --              231           --
   Federal Home Loan Bank of Atlanta advances                  807            365          1,505            647
                                                        ----------     ----------     ----------     ----------
          Total interest expense                             5,084          4,638         10,103          9,235
                                                        ----------     ----------     ----------     ----------

Net Interest Income                                          4,965          5,046          9,733         10,077

Provision for Loan Losses                                      167            200            267            400
                                                        ----------     ----------     ----------     ----------

Net Interest Income After Provision for Loan Losses          4,798          4,846          9,466          9,677
                                                        ----------     ----------     ----------     ----------

Non-interest Income:
    Service charges and fees                                   742            496          1,466            966
    Gain on sale of mortgage loans                              79            366            178            659
    Other, net                                                 206            108            406            249
                                                        ----------     ----------     ----------     ----------
          Total non-interest income, net                     1,027            970          2,050          1,874
                                                        ----------     ----------     ----------     ----------



</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                     <C>            <C>            <C>            <C>
Non-interest Expense:
    Employee compensation and benefits                       1,858          1,718          3,767          3,494
    Federal deposit insurance premium                           86             81            170            163
    Occupancy and equipment expense                            376            397            779            727
    Computer services                                          142            132            296            195
    Advertising and promotions                                  94            116            249            286
    Office supplies, postage, printing, etc                    179            180            357            362
    Other                                                      588            466          1,105            856
                                                        ----------     ----------     ----------     ----------
          Total non-interest expense                         3,323          3,090          6,723          6,083
                                                        ----------     ----------     ----------     ----------

Income Before Income Taxes                                   2,502          2,726          4,793          5,468

Provision for Income Taxes                                     977          1,130          1,898          2,186
                                                        ----------     ----------     ----------     ----------

Net Income                                              $    1,525     $    1,596     $    2,895     $    3,282
                                                        ==========     ==========     ==========     ==========

Basic and Diluted Earnings Per Share                    $     0.45     $     0.44     $     0.86     $     0.86
                                                        ==========     ==========     ==========     ==========

Weighted Average Shares Outstanding                      3,363,135      3,622,344      3,357,562      3,831,541
                                                        ==========     ==========     ==========     ==========

</TABLE>
See accompanying notes to consolidated financial statements.

                                        2

<PAGE>
<TABLE>
<CAPTION>
                                            FirstSpartan Financial Corp. and Subsidiaries
                                           Consolidated Statements of Stockholders' Equity
                                           For Six Months Ended December 31, 1999 and 1998
                                                  (In Thousands Except Share Data)





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

<S>                                    <C>            <C>           <C>            <C>            <C>            <C>
Balance, June 30, 1998                  4,253,160     $       44    $   87,624     $   52,662     $   (8,113)    $     --
                                       ----------     ----------    ----------     ----------     ----------     ----------

Net income                                   --             --            --            3,282           --             --
Unrealized loss on securities                   0
 available-for-sale, net of taxes            --             --            --             --             --             --
                                       ----------     ----------    ----------     ----------     ----------     ----------
     Total comprehensive income              --             --            --            3,282           --             --
                                       ----------     ----------    ----------     ----------     ----------     ----------
Issuance of treasury stock to MRDP        177,215           --            (670)          --            8,113         (7,443)
ESOP stock committed for release             --             --             205           --             --             --
Purchase of treasury stock               (642,405)          --            --             --          (20,955)          --
Dividends ($0.35 per share)                  --             --            --           (1,340)          --             --
Prorata vesting of restricted stock          --             --            --             --             --              714
                                       ----------     ----------    ----------     ----------     ----------     ----------

Balance, December 31, 1998              3,787,970     $       44    $   87,159     $   54,604     $  (20,955)    $   (6,729)
                                       ==========     ==========    ==========     ==========     ==========     ==========



Balance, June 30, 1999                  3,787,970     $       44    $   42,648     $   54,905     $  (20,955)    $   (4,660)
                                       ----------     ----------    ----------     ----------     ----------     ----------

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          --             --            --             --             --              579
                                       ----------     ----------    ----------     ----------     ----------     ----------

Balance, December 31, 1999              3,787,970     $       44    $   42,802     $   56,304     $  (20,955)    $   (4,081)
                                       ==========     ==========    ==========     ==========     ==========     ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                       Accumulated
                                                        Other
                                                      Comprehen-
                                       Unallocated       sive           Total
                                          ESOP          (Loss)      Stockholders'
                                         Stock          Income         Equity
                                       ----------     ----------     ----------
<S>                                    <C>            <C>            <C>
Balance, June 30, 1998                 $   (6,442)    $      (14)    $  125,761
                                       ----------     ----------     ----------

Net income                                   --             --            3,282
Unrealized loss on securities
 available-for-sale, net of taxes            --               (5)            (5)
                                       ----------     ----------     ----------
     Total comprehensive income              --               (5)         3,277
                                       ----------     ----------     ----------
Issuance of treasury stock to MRDP           --             --             --
ESOP stock committed for release              295           --              500
Purchase of treasury stock                   --             --          (20,955)
Dividends ($0.35 per share)                  --             --           (1,340)
Prorata vesting of restricted stock          --             --              714
                                       ----------     ----------     ----------

Balance, December 31, 1998             $   (6,147)    $      (19)    $  107,957
                                       ==========     ==========     ==========



Balance, June 30, 1999                 $   (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
                                       ----------     ----------     ----------

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

</TABLE>
                                        3
<PAGE>
<TABLE>
<CAPTION>
                            FirstSpartan Financial Corp. and Subsidiaries
                                Consolidated Statements of Cash Flows
                                       (Dollars In Thousands)
                                             (Unaudited)

                                                                                 Six Months Ended
                                                                                    December 31,
                                                                              ----------------------
                                                                               1999          1998
                                                                              --------     --------
<S>                                                                           <C>          <C>
Cash Flows from Operating Activities:
    Net income                                                                $  2,895     $  3,282
    Adjustments to reconcile net income to net
       cash provided by operating activities:
       Provision for loan losses                                                   267          400
       Deferred income tax provision (benefit)                                      60         (339)
       Amortization of deferred income                                             (85)        (237)
       Amortization of loan servicing assets                                        95           50
       (Accretion) amortization of  (discounts) premiums on
          investment and mortgage-backed securities                                (21)           4
       Depreciation                                                                415          378
       Allocation of ESOP stock at fair value                                      449          500
       Prorata vesting of restricted stock                                         579          714
       Loss on disposal of property and equipment                                 --             13
       Gain on sale of real estate acquired in settlement of loans                 (20)        --
       Decrease in loans held-for-sale                                           7,062          675
       Increase in other assets                                                 (5,788)        (781)
       Increase (decrease) in other liabilities                                    892       (1,790)
                                                                              --------     --------
               Net cash provided by operating activities                         6,800        2,869
                                                                              --------     --------

Cash Flows from Investing Activities:
     Net loan originations and principal collections                            (4,103)       2,225
     Purchases of loans                                                        (33,979)     (31,424)
     Purchases of investment securities available-for-sale                     (10,216)        (627)
     Proceeds from maturities of investment securities available-for-sale         --          2,000
     Principal repayments and proceeds from maturities of mortgage-
        backed securities                                                           16           17
     Proceeds from sale of real estate acquired in settlement of loans             349         --
     Purchases of property and equipment                                          (471)      (1,880)
     Proceeds from sale of property and equipment                                 --              3
                                                                              --------     --------
               Net cash used in investing activities                           (48,404)     (29,686)
                                                                              --------     --------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                           <C>          <C>
Cash Flows from Financing Activities:
     Net increase in deposits                                                    1,520       23,333
     Dividends paid                                                             (1,496)      (1,340)
     Advances from Federal Home Loan Bank of Atlanta                            37,000       10,000
     Repayment of Advances from Federal Home Loan Bank of Atlanta              (10,000)        --
     Other borrowings                                                            8,910         --
     Principal payments on other borrowings                                    (35,000)        --
     Purchases of treasury stock                                                  --        (20,955)
                                                                              --------     --------
               Net cash provided by financing activities                      $    934     $ 11,038
                                                                              --------     --------
</TABLE>

                                        4

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

                                                                                   Six Months Ended
                                                                                      December 31,
                                                                                 1999             1998
                                                                             -------------    -------------


<S>                                                                        <C>              <C>
Net Decrease in Cash and Cash Equivalents                                  $      (40,670)  $      (15,779)

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

Cash and Cash Equivalents at End of Period                                 $       17,750   $       33,189
                                                                             =============    =============

Supplemental Disclosures of Cash Flow Information:
     Cash paid during the period for:
          Interest                                                         $        9,477   $        9,102
                                                                             =============    =============
          Income taxes                                                     $          722   $        3,184
                                                                             =============    =============
     Transfers from loans to real estate acquired in settlement of loans   $          164   $            2
                                                                             =============    =============
     Change in unrealized loss on investment securities available-for-sale $         (153)  $           (8)
                                                                             =============    =============
     Change in deferred taxes related to unrealized loss on investment
         securities available-for-sale                                     $           58   $            3
                                                                             =============    =============
     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.  Also,  certain June 30, 1999 balance
         sheet  amounts  have been  reclassified  to conform to the December 31,
         1999 presentation.

         The results of operations  for the three- and  six-month  periods ended
         December 31, 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  3,363,135  and  3,622,344,
         respectively, for the three months ended December 31, 1999 and 1998 and
         weighted average common shares  outstanding of 3,357,562 and 3,831,541,
         respectively,  for the six months ended  December 31, 1999. The Company
         had no dilutive securities  outstanding during the three- and six-month
         periods ended December 31, 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

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.

         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, 1999 and June 30, 1999

         Total  assets  were  $551.4  million at  December  31,  1999 and $545.7
         million  at June 30,  1999,  an  increase  of $5.7  million  or 1%. The
         primary components of this increase are $37.7 million,  or 9%, in loans
         receivable,  net,  $10.1  million,  or 43%,  in  investment  securities
         available-for-sale,   and  $5.1  million  in  other  assets  offset  by
         decreases of $40.7 million,  or 70%, in cash and cash  equivalents  and
         $7.1  million in loans  held-for-sale.  The majority of the decrease in
         cash and cash equivalents was attributable to uses of cash in investing
         activities  of $48.4  million.  A more detailed  reconciliation  may be
         found in the  Consolidated  Statements of Cash Flows for the six months
         ended December 31, 1999. Loans receivable,  net, increased primarily as
         a result of an increase of $24.6  million in mortgage  loans since June
         30, 1999.  Included in the $24.6  million  increase  were  increases of
         $10.3 million in  commercial  mortgage  loans,  $8.8 million in one- to
         four-family  mortgage loans,  $3.4 million in construction  loans,  and
         $2.1 million in land development  loans.  Loans  receivable,  net, also
         increased  due to a $7.4 million  increase in  non-mortgage  commercial
         loans and a $5.6 million increase in home equity loans.

                                       7
<PAGE>
         Deposit  accounts  increased $1.5 million to $407.5 million at December
         31, 1999 from $406.0  million at June 30, 1999.  Advances from the FHLB
         of Atlanta  increased  $27.0  million to $61.0  million at December 31,
         1999 from $34.0 million at June 30, 1999 and were used  principally  to
         fund repayment of other borrowings.

         Stockholders'  equity  increased  by $2.4  million to $68.4  million at
         December  31,  1999 from  $66.0  million at June 30,  1999.  Items that
         increased  stockholders'  equity were the  allocation  of shares in the
         amount of $1.0 million under the Bank's  Employee Stock  Ownership Plan
         ("ESOP") and  restricted  stock plan and net income of $2.9 million for
         the six months ended December 31, 1999.  Offsetting  these increases to
         stockholders' equity was the payment of dividends of $1.5 million.

         Non-performing  assets  increased by $1.9 million to $3.8  million,  or
         0.68% of total assets, at December 31, 1999 from $1.9 million, or 0.34%
         of total  assets,  at June 30, 1999.  The increase was due primarily to
         the  placement  of  $2.5  million  in  speculative  construction  loans
         outstanding   to   several   partnerships   with   a   common   general
         partner/builder on non-accrual status. All of the partnerships declared
         chapter 11  bankruptcy in December  1999.  Although the loans were less
         than 90 days past due on December 31,  1999,  the Bank placed the loans
         in  non-accrual  status because of  management's  belief that the loans
         will reach 90 days past due before the bankruptcy is resolved. Although
         no assurances can be given,  based on an evaluation of the  collateral,
         management  of the Bank  believes  that all  principal  amounts will be
         collected on the loans.

Comparison of Operating Results for the Three Months Ended December 31, 1999 and
December 31, 1998

         Net Income. Net income decreased $100,000 to $1.5 million for the three
         months  ended  December 31, 1999 from $1.6 million for the three months
         ended December 31, 1998. The principal item decreasing earnings for the
         quarter was the expected  reduction in net interest income on the funds
         used to pay the cash  distribution of $12.00 per share last June. Other
         items  decreasing  net income for the  quarter  were a decrease  in the
         provision for loan losses 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  average  shares
         outstanding.  Share  repurchases  in the prior year  quarter  decreased
         average  shares  outstanding  by  approximately   275,000  shares.  The
         remainder of the share  reduction was due  principally to the effect of
         share  purchases  by the  Company's  ESOP with $4.3 million it received
         from the $12.00 per share 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 awarded
         to participants.

         Net Interest  Income.  Net interest income was flat at $5.0 million for
         both the three  months  ended  December  31, 1999 and the three  months
         ended December 31, 1998. As discussed  above,  net interest  income was
         reduced  due to the  payment of the 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 $385,000, or 24%, when comparing the current and prior
         year quarters. The impact of the stock repurchases is estimated to have
         decreased net income by  approximately  $45,000,  or 3%,

                                       8
<PAGE>
         when comparing the current and prior year quarters.

         The cash  distribution and share repurchases were funded partially with
         cash equivalents and also through  borrowings.  As described below, the
         average balance of  interest-earning  assets did increase even though a
         large  amount  of  interest-earning   assets  were  used  in  the  cash
         distribution   and   share    repurchases.    Also   described   below,
         interest-bearing  liabilities  increased in greater proportion than the
         increase in  interest-earning  assets. This was due to the funding of a
         portion of the cash distribution and share repurchases with borrowings.
         Since interest-earning  assets did increase (principally an increase in
         loans  receivable,  net) the spread  earned on those  assets  served to
         offset the loss of net  interest  income on the funds used for the cash
         distribution and the share repurchases.

         The  average  balance of  interest-earning  assets  was $522.5  million
         during the quarter ended  December 31, 1999 compared to $505.4  million
         during the quarter ended December 31, 1998. The average yield increased
         to 7.69%  from 7.66% for the prior year  quarter  due to higher  market
         interest rates in recent quarters.

         The average balance of interest-bearing liabilities increased to $480.4
         million  during the three  months  ended  December 31, 1999 from $410.9
         million  during the three  months ended  December  31, 1998,  more than
         offsetting  a  decrease  in  the  average   cost  of   interest-bearing
         liabilities  to 4.20% from 4.48%.  The  decrease in the average cost is
         attributable  to deposits  that  repriced  during lower market rates in
         late  1998 and  throughout  much of 1999.  Recent  increases  in market
         interest rates have not yet had a full impact on deposits since a large
         portion of deposits have not yet repriced at prevailing market interest
         rates as they have not yet reached their contractual maturity. The cost
         of  interest-bearing  liabilities  is  expected  to increase if current
         interest  rates  prevail or increase.  Due to the  inability to predict
         interest rates, the amount of increase in the cost of deposits, if any,
         cannot be quantified.

         Net yield on interest-earning assets decreased to 3.80% for the quarter
         ended  December 31, 1999 from 3.99% for the quarter ended  December 31,
         1998 due  primarily  to the above  mentioned  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. 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.

                                       9
<PAGE>
         The provision for loan losses was largely unchanged at $167,000 for the
         three months ended December 31, 1999 compared to $200,000 for the three
         months  ended  December  31,  1998.   Non-performing  assets  increased
         primarily  because  of a  related  group  of  construction  loans.  See
         Comparison  of  Financial  Condition  at December 31, 1999 and June 30,
         1999. Since the increase in non-performing assets is related to a group
         of  related  loans  and  management  believes  that no  losses  will be
         realized on these loans, the increase in  non-performing  assets had no
         impact  on  the  provision  for  loan  losses.  Management  deemed  the
         allowance for loan losses to be adequate at December 31, 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.

         The allowance for loan losses increased to $3.1 million at December 31,
         1999 from $2.9  million at June 30,  1999 and was 0.61% of gross  loans
         receivable at December 31, 1999 and June 30, 1999.  Also,  the ratio of
         allowance for loan losses to non-performing loans decreased to 87.1% at
         December  31, 1999 from 190.4% at June 30,  1999 due  primarily  to the
         increase in non-performing loans described above.

         Non-interest Income.  Non-interest income was $1.0 million for both the
         three  months  ended  December  31,  1999 and the  three  months  ended
         December 31, 1998.  Although  total  non-interest  income was unchanged
         there were changes in the components of non-interest income. Fee income
         increased to $742,000  from $496,000  principally  due to the growth in
         checking  accounts.  Gains from the sale of mortgage loans decreased to
         $79,000 in the three  months ended  December 31, 1999 from  $366,000 in
         the three months ended  December 31, 1998,  primarily due to the larger
         number of loan refinancings occurring during the period of lower market
         interest  rates  in the  prior  year  quarter.  The  loan  refinancings
         resulted in a large amount of  fixed-rate  (principally  30-year  term)
         loans  that  were sold for  interest  rate  risk  management.  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 $3.3  million for the
         three months ended  December 31, 1999  compared to $3.1 million for the
         same period in 1998.  The increase  consisted  principally of increased
         personnel  costs and various other operating  expenses  associated with
         the growth of the Company.

         Income  Taxes.  The provision  for income taxes  decreased  $153,000 to
         $977,000 for the three months ended  December 31, 1999  compared to the
         three  months ended  December 31, 1998,  primarily as a result of lower
         income before income taxes.


                                       10
<PAGE>
Comparison of Operating  Results for the Six Months Ended  December 31, 1999 and
December 31, 1998

         Net Income.  Net income decreased  $400,000 to $2.9 million for the six
         months  ended  December  31, 1999 from $3.3  million for the six months
         ended December 31, 1998. The principal item decreasing earnings for the
         six-month  period was the expected  reduction in net interest income on
         the funds  used to pay the cash  distribution  of $12.00 per share last
         June.  Other items affecting net income for the six-month period were a
         decrease  in the  provision  for loan  losses,  increased  non-interest
         income, and increased non-interest expense.  Earnings per share for the
         current six-month period did not decrease in the same proportion as net
         income  due  to  a  reduction  in  average  shares  outstanding.  Share
         repurchases  in  the  prior  year  period   decreased   average  shares
         outstanding  during the current  year period by  approximately  277,000
         shares. The remainder of the share reduction was due principally to the
         effect of share  purchases by the  Company's  ESOP with $4.3 million it
         received  from the $12.00 per share 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 awarded
         to participants.

         Net Interest  Income.  Net interest income  decreased  $300,000 to $9.7
         million for the six months ended  December 31, 1999 from $10.0  million
         for the six months ended  December 31, 1998.  As discussed  above,  net
         interest income was reduced due to the payment of the 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  $775,000,  or
         24%, when comparing the current and prior year six-month  periods.  The
         impact of the stock  repurchases  is  estimated to have  decreased  net
         income by approximately $195,000, or 6%, when comparing the current and
         prior year periods.

         The cash  distribution and share repurchases were funded partially with
         cash equivalents and also through  borrowings.  As described below, the
         average balance of  interest-earning  assets did increase even though a
         large  amount  of  interest-earning   assets  were  used  in  the  cash
         distribution   and   share    repurchases.    Also   described   below,
         interest-bearing  liabilities  increased in greater proportion than the
         increase in  interest-earning  assets. This was due to the funding of a
         portion of the cash distribution and share repurchases with borrowings.
         Since interest-earning  assets did increase (principally an increase in
         loans  receivable,  net) the spread  earned on those  assets  served to
         offset the loss of net  interest  income on the funds used for the cash
         distribution and the share repurchases.

         The  average  balance of  interest-earning  assets  was $519.3  million
         during  the six months  ended  December  31,  1999  compared  to $504.2
         million  during the six months ended  December  31,  1998.  The average
         yield  decreased  to 7.64% from 7.66% for the prior year  period due to
         lower market interest rates.

         The average balance of interest-bearing liabilities increased to $475.7
         million  during the six months  ended  December  31,  1999 from  $402.0
         million  during the six  months  ended  December  31,  1998,  more than
         offsetting  a  decrease  in  the  average   cost  of   interest-bearing
<PAGE>
         liabilities  to 4.21% from 4.60%.  The  decrease in the average cost is
         attributable  to deposits  that  repriced  during lower market rates in
         late  1998 and  throughout  much of 1999.  Recent  increases  in market
         interest rates have not yet had a full impact on deposits since a large
         portion of deposits have not yet repriced at prevailing market interest
         rates as they have not yet reached their contractual maturity. The cost
         of  interest-bearing  liabilities  is  expected  to increase if current
         interest  rates  prevail or  increase,  however,  the amount  cannot be
         quantified.


                                       11
<PAGE>
         Net yield on  interest-earning  assets  decreased  to 3.75% for the six
         months  ended  December  31,  1999 from 4.00% for the six months  ended
         December 31, 1998 due primarily to the above mentioned  increase in the
         average  balance of  interest-bearing  liabilities  and decrease in the
         average yield on interest-earning assets.

         Provision  for Loan Losses.  The provision for loan losses was $267,000
         for the six months ended December 31, 1999 compared to $400,000 for the
         six months ended December 31, 1998. See Comparison of Operating Results
         for the Three  Months  Ended  December 31, 1999 and December 31, 1998 -
         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 by $200,000 to $2.1
         million for the six months  ended  December  31, 1999 from $1.9 million
         for the six months ended December 31, 1998, primarily as a result of an
         increase in fee income to $1.5 million  from $1.0  million  principally
         due to the  growth in  checking  accounts.  The  growth in fee  income,
         however,  was offset by a decrease  in gains from the sale of  mortgage
         loans to  $178,000  in the six  months  ended  December  31,  1999 from
         $659,000  in the six  months  ended  December  31,  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 period. 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 $6.7 million for the six
         months ended  December  31, 1999  compared to $6.1 million for the same
         period  in  1998.  The  increase  consisted  principally  of  increased
         personnel  costs and various other operating  expenses  associated with
         the growth of the Company.

         Income Taxes. The provision for income taxes decreased $288,000 to $1.9
         million for the six months ended  December 31, 1999 compared to the six
         months ended  December 31, 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  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.  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
<PAGE>
         liquidity  requirement  for the Bank is the  maintenance  of an average
         daily balance of liquid assets (cash and eligible investments) equal to
         at least 4% of the average daily balance of net  withdrawable  deposits
         and short-term  borrowings.  This  liquidity  requirement is subject to
         periodic change. The Company and the Bank generally maintain sufficient
         cash and short-term  investments to meet short-term liquidity needs. At
         December 31, 1999, cash and cash equivalents  totaled $17.8 million, or
         3%  of  total  assets,   and   investment   securities   classified  as
         available-for-sale  with  maturities  of one year or less totaled $16.8
         million,  or 3% of total  assets.  At December 31, 1999,  the Bank also
         maintained  an

                                       12
<PAGE>
         uncommitted  credit  facility with the FHLB of Atlanta,  which provides
         for  immediately  available  advances  up to  an  aggregate  amount  of
         approximately $93.3 million of which $61.0 million had been advanced.

         FirstSpartan  is  not  subject  to  any  separate   regulatory  capital
         requirements.  As of December 31, 1999, the Bank's  regulatory  capital
         was in excess of all applicable  regulatory  requirements.  At December
         31, 1999,  under  applicable  regulations,  the Bank's actual tangible,
         core and  risk-based  capital  ratios  were  11.0%,  11.0%  and  16.9%,
         respectively,   compared  to  requirements  of  1.5%,  3.0%  and  8.0%,
         respectively.

         At December  31,  1999,  the Company  had loan  commitments  (excluding
         undisbursed  portions of interim  construction  loans) of approximately
         $5.6 million  ($770,000 at fixed rates  ranging from 7.625% to 9.125%).
         In  addition,  at December  31,  1999,  the unused  portion of lines of
         credit (principally variable-rate home equity lines of credit) extended
         by  the  Company  was  approximately  $54.1  million.  Furthermore,  at
         December 31, 1999, the Company had certificates of deposit scheduled to
         mature  in one year or less of  $218.7  million.  Based  on  historical
         experience,   the   Company   anticipates   that  a  majority  of  such
         certificates of deposit will be renewed at maturity.

Year 2000

         Before January 1, 2000, the Company had implemented and  satisfactorily
         tested a comprehensive plan to address the effect of the Year 2000 date
         change on the Company's mission critical computer systems.  While there
         can be no assurances  that the Company's Year 2000 plan has effectively
         addressed the Year 2000 issue,  the Company has not been notified,  and
         it is unaware of, any vendor or service  provider  problems  related to
         Year 2000,  and all of the Company's  systems have  performed  properly
         since  January 1, 2000.  Likewise,  the  Company is unaware of any Year
         2000 issues that have  impaired  the ability of its  borrowers to repay
         their debts.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         As of December  31,  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.

                                       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
                  On October 20,  1999,  the Company  held an annual  meeting of
                  shareholders for the following purposes:

                  1.     To elect three  directors  to serve for a term of three
                         years;

                  2.     To ratify the  appointment  of Deloitte & Touche LLP as
                         independent  auditors  for the fiscal  year ending June
                         30, 2000; and

                  3.     To act upon such  other  matters as may  properly  come
                         before the meeting or any adjournment's thereof.

                  The results of the voting are set forth below:

                  1.       Election of Directors:

                                 Name              For          Withheld
                                 ----              ---          --------
                           Billy L. Painter     3,023,974         43,008
                           Robert L. Handell    3,030,548         36,434
                           Robert R. Odom       3,028,355         38,627



                           Directors   continuing   in   office   (and  date  of
                           expiration  of term) are:  E. Lea Salter  (2000),  R.
                           Wesley Hammond (2000), E.L. Sanders (2001), and David
                           E. Tate (2001).

                  2.       Ratification  of Deloitte & Touche LLP as independent
                           auditors for the fiscal year ending June 30, 2000:

                                     For          Against        Abstain
                                 ---------        -------        -------
                                 3,055,517         9,122          2,343


                                       14

<PAGE>
                  3.       Other matters:

                           No other matters came before the meeting.

Item 5.           Other Information
                  Not applicable

Item 6.           Exhibits and Reports on Form 8-K
                  (a)      Exhibits
<TABLE>
<CAPTION>
<S>                 <C>             <C>
                    (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*****
                   (10) (m)         Severance Agreement with J. Timothy Camp
                   (21)             Subsidiaries of the Registrant**
                   (27)             Financial Data Schedule
</TABLE>

                 (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, 2000 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, 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.


                                       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