<PAGE>
 
                                 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 MARCH 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 May 12, 1999.
<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES


                               Table of Contents

<TABLE> 
<CAPTION> 
                                                                         PAGE
                                                                         ----
PART I.   FINANCIAL INFORMATION
-------   ---------------------
<S>       <C>                                                            <C>    
Item 1.   Financial Statements (unaudited)
 
          Consolidated Balance Sheets at March 31, 1999 and June 
          30, 1998                                                         1
 
          Consolidated Statements of Income for the
          Three- and Nine-Month Periods Ended March 31, 1999 and 
          1998                                                             2
 
          Consolidated Statements of Equity for the
          Three- and Nine-Month Periods Ended March 31, 1999 and 
          1998                                                             3
 
          Consolidated Statements of Cash Flows for the Three- 
          and Nine-Month Periods Ended March 31, 1999 and 1998           4-5
 
          Notes to Consolidated Financial Statements                     6-8
 
Item 2.   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                           8-16
 
Item 3.   Quantitative and Qualitative Disclosures About Market 
          Risk                                                            16
 
PART II.  OTHER INFORMATION                                            17-18
--------  -----------------
 
SIGNATURES                                                                19
</TABLE> 
 
<PAGE>
 
ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)
                                 (UNAUDITED) 
<TABLE> 
<CAPTION> 
                                                                                     MARCH 31,           JUNE 30,
                                                                                       1999                1998
                                                                                    ----------          -----------
ASSETS
<S>                                                                                <C>                  <C>    
   Cash                                                                            $    8,150           $    8,450
   Federal funds sold and overnight interest-bearing deposits                          27,772               40,518
                                                                                    ----------          -----------
          Total cash and cash equivalents                                              35,922               48,968
   Investment securities available-for-sale-at fair value (amortized cost:
     $39,698 and $28,732 at March 31, 1999 and June 30, 1998, respectively)            39,641               28,709
   Mortgage-backed securities held-to-maturity-at amortized cost (fair value:
     $61 and $90 at March 31, 1999 and June 30, 1998 respectively)                         60                   88
   Loans receivable, net                                                              434,976              416,462
   Loans held-for-sale-at lower of cost or market (market value: $11,348
     and $7,315 at March 31, 1999 and June 30, 1998, respectively)                     11,348                7,294
   Office properties and equipment, net                                                10,204                8,445
   Federal Home Loan Bank of Atlanta stock - at cost                                    3,612                3,446
   Accrued interest receivable                                                          3,074                2,813
   Real estate acquired in settlement of loans                                             38                   36
   Other assets                                                                         2,116                1,172 
                                                                                    ----------          -----------
                    TOTAL ASSETS                                                   $  540,991           $  517,433
                                                                                    ==========          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

   LIABILITIES:
    Deposit accounts                                                               $  400,672           $  369,812
    Advances from borrowers for taxes and insurance                                       537                1,063
    Advances from Federal Home Loan Bank of Atlanta                                    27,000               17,000
    Other liabilities                                                                   3,337                3,797
                                                                                    ----------          -----------
                    Total liabilities                                                 431,546              391,672
                                                                                    ----------          -----------
   STOCKHOLDERS' EQUITY:
    Preferred stock, $0.01 par value:
     Authorized - 250,000 shares; none issued or outstanding
      at March 31, 1999 and June 30, 1998                                                   -                    -
    Common stock, $0.01 par value:
     Authorized - 12,000,000 shares; issued: 4,430,375 at March 31,
      1999 and June 30, 1998; outstanding: 3,787,970 and 4,253,160
      at March 31, 1999 and June 30, 1998, respectively                                    44                   44
    Additional paid-in capital                                                         87,233               87,624
    Retained earnings                                                                  55,520               52,662
    Treasury stock-at cost (642,405 shares at March 31, 1999 and
      177,215 shares at June 30,1998)                                                 (20,955)              (8,113)
    Unearned restricted stock                                                          (6,362)                   -
    Unallocated ESOP stock                                                             (5,999)              (6,442)
    Accumulated other comprehensive income                                                (36)                 (14)
                                                                                    ----------          ----------- 
                    Total stockholders' equity                                        109,445              125,761
                                                                                    ----------          -----------
                    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $  540,991           $  517,433
                                                                                    ==========          ===========
</TABLE> 
   
See accompanying notes to consolidated financial statements.

                                       1
<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)



<TABLE> 
<CAPTION> 
                                                                 THREE MONTHS ENDED         NINE MONTHS ENDED
                                                                     MARCH 31,                  MARCH 31, 
                                                              ------------------------   ------------------------   
                                                                 1999         1998          1999         1998
                                                              ----------   -----------   ----------   -----------
<S>                                                           <C>          <C>           <C>          <C>     
INVESTMENT INCOME:
  Interest on loans                                           $    8,751   $     8,210   $   26,079   $    23,758
  Interest and dividends on investment securities,
   mortgage-backed securities and other                              796         1,066        2,780         4,144 
                                                              ----------   -----------   ----------   -----------
     Total investment income                                       9,547         9,276       28,859        27,902
                                                              ----------   -----------   ----------   -----------

INTEREST EXPENSE:
  Deposit accounts                                                 4,138         4,184       12,726        12,775
  Federal Home Loan Bank of Atlanta advances                         357             1        1,004             1
                                                              ----------   -----------   ----------   -----------
     Total interest expense                                        4,495         4,185       13,730        12,776
                                                              ----------   -----------   ----------   -----------

NET INTEREST INCOME                                                5,052         5,091       15,129        15,126

PROVISION FOR LOAN LOSSES                                            200           130          600           310  
                                                              ----------   -----------   ----------   -----------

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                4,852         4,961       14,529        14,816
                                                              ----------   -----------   ----------   -----------  

NONINTEREST INCOME:
  Service charges and fees                                           537           375        1,503         1,068
  Gain on sale of mortgage loans                                     366           102        1,025           102
  Other, net                                                         181           174          430           417
                                                              ----------   -----------   ----------   -----------
     Total noninterest income, net                                 1,084           651        2,958         1,587
                                                              ----------   -----------   ----------   -----------  
                                                                         
NONINTEREST EXPENSES:                                                    
  Employee compensation and benefits                               1,780         1,196        5,274         3,677  
  Federal deposit insurance premium                                   82           114          245           270
  Occupancy and equipment expense                                    378           295        1,105           805
  Computer services                                                  126           165          321           486
  Advertising and promotions                                         143           161          429           421
  Office supplies, postage, printing, etc.                           208           197          570           481
  Other                                                              491           402        1,347         1,012
                                                              ----------   -----------   ----------   -----------             
     Total noninterest expense                                     3,208         2,530        9,291         7,152
                                                              ----------   -----------   ----------   -----------  
                                                                         
INCOME BEFORE INCOME TAXES                                         2,728         3,082        8,196         9,251   
                                                                         
PROVISION FOR INCOME TAXES                                         1,117         1,205        3,303         3,580  
                                                              ----------   -----------   ----------   -----------  
                                                                         
NET INCOME                                                    $    1,611   $     1,877   $    4,893   $     5,671   
                                                              ==========   ===========   ==========   ===========  
                                                                         
BASIC EARNINGS PER SHARE                                      $     0.46   $      0.46   $     1.32   $      1.39
                                                              ==========   ===========   ==========   ===========    
                                                                         
WEIGHTED AVERAGE SHARES OUTSTANDING /(1)/                      3,484,336     4,098,436    3,717,550     4,088,141
                                                              ==========   ===========   ==========   ===========    
</TABLE> 


/(1)/  FirstSpartan's initial public offering closed on July 8, 1997. For
       purposes of earnings per share calculations for the nine months ended
       March 31, 1998, shares issued on July 8, 1997 have been assumed to be
       outstanding as of July 1, 1997.

See accompanying notes to consolidated financial statements.

                                       2

<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EQUITY
               FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND 1998
                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                                                                               ACCUMULATED         
                                                ADDITIONAL                          UNEARNED     UNALLOCATED      OTHER        
                                       COMMON     PAID-IN     RETAINED   TREASURY   RESTRICTED      ESOP       COMPREHENSIVE   
                                       STOCK      CAPITAL     EARNINGS     STOCK      STOCK         STOCK         INCOME       
                                      -------   ----------   ---------  ---------  -----------  ------------  --------------    
<S>                                   <C>       <C>          <C>        <C>        <C>          <C>           <C>            
BALANCE, JUNE 30, 1997                $     -   $         -  $  46,960  $       -  $         -  $          -  $           18  
                                                                                                                              
Net income                                  -             -      5,671          -            -             -               -  
Change in net unrealized gain                                                                                                 
 on available-for-sale securities           -             -          -          -            -             -              11  
Issuance of common stock                   44        86,981          -          -            -        (7,089)              -  
ESOP shares committed for release           -           459          -          -            -           499               -  
Cash dividends ($0.30 per share)            -             -     (1,220)         -            -             -               -   
                                      -------   -----------  ---------  ---------  -----------  ------------  -------------- 

BALANCE, MARCH 31, 1998               $    44   $    87,440  $  51,411  $       -  $         -  $     (6,590) $           29  
                                      =======   ===========  =========  =========  ===========  ============  ==============

BALANCE, JUNE 30, 1998                $    44   $    87,624  $  52,662  $  (8,113) $         -  $     (6,442) $          (14) 
                                                                                                                             
Net income                                  -   $         -  $   4,893          -            -             -               -  
Change in net unrealized loss                                                                                                
 on available-for-sale securities           -             -          -          -            -             -             (22) 
Issuance of treasury stock to MRDP          -          (670)                8,113       (7,443)            -               -  
Purchase of treasury stock                  -             -          -    (20,955)           -             -               -  
Cash dividends ($0.55 per share)            -             -     (2,035)         -            -             -               -  
Prorata vesting of restricted stock         -             -          -          -        1,081             -               -  
ESOP shares committed for release           -           279          -          -            -           443               -  
                                      -------   -----------  ---------  ---------  -----------  ------------  -------------- 

BALANCE, MARCH 31, 1999               $    44   $    87,233  $  55,520  $ (20,955) $    (6,362) $     (5,999) $          (36) 
                                      =======   ===========  =========  =========  ===========  ============  ============== 

<CAPTION> 
                                       TOTAL        
                                       EQUITY       
                                      -------        
<S>                                   <C>                                      
BALANCE, JUNE 30, 1997                $  46,978    
                                                   
Net income                                5,671    
Change in net unrealized gain                      
 on available-for-sale securities            11    
Issuance of common stock                 79,936    
ESOP shares committed for release           958    
Cash dividends ($0.30 per share)         (1,220)   
                                      ---------
BALANCE, MARCH 31, 1998               $ 132,334
                                      =========

BALANCE, JUNE 30, 1998                $ 125,761
                                               
Net income                                4,893
Change in net unrealized loss                  
 on available-for-sale securities           (22)
Issuance of treasury stock to MRDP            - 
Purchase of treasury stock              (20,955)
Cash dividends ($0.55 per share)         (2,035)
Prorata vesting of restricted stock       1,081 
ESOP shares committed for release           722 
                                      ---------

BALANCE, MARCH 31, 1999               $ 109,445     
                                      =========
</TABLE> 

See accompanying notes of consolidated financial statements.

                                       3
<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                             THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                  MARCH 31,                    MARCH 31,
                                                             ------------------    ---------------------------
                                                               1999      1998        1999               1998
                                                             --------   -------    ---------        ----------
<S>                                                          <C>        <C>        <C>              <C>  
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                  $  1,611   $ 1,877    $   4,893        $    5,671
 Adjustments to reconcile net income to net 
   cash provided by operating activities:                                 
   Provision for loan losses                                      200       130          600               310    
   Deferred income tax benefit                                   (104)     (303)        (443)             (359)  
   Recognition of deferred income                                (182)     (114)        (419)             (147)    
   Amortization of loan servicing assets                           37        15           87                44   
   Amortization of premiums on investment and
    mortgage-backed securities                                      1         -            5                 -   
   Depreciation                                                   210       156          588               435
   ESOP shares committed for release at fair value                222       307          722               958
   Prorata vesting of restricted stock                            367         -        1,081                 -
   (Increase) decrease in other assets                           (511)      (74)      (1,292)              371  
   Additions to loans held-for-sale                           (21,587)   (7,549)     (49,663)          (11,362) 
   Proceeds from sale of loans held-for-sale                   17,224     5,674       46,634             9,812         
   Gain on sale of loans held-for-sale                           (366)     (102)      (1,O25)             (102)
   Loss on disposal of property and equipment                       -         -           13                 -      
   Increase (decrease) in other liabilities                     1,259      (216)        (531)              390
                                                             --------   -------      -------        ----------
        Net cash (used in) provided by operating activities   $(1,619)   $ (199)     $ 1,250             6,021
                                                             --------   -------      -------        ----------  
CASH FLOWS FROM INVESTING ACTIVITIES:
 Net loan originations and principal collections              29,162    (6,703)       31,387           (30,381)
 Purchase of loans                                           (18,660)   (5,999)      (50,084)          (16,107)   
 Purchase of investment securities available-for-sale        (12,844)   (7,628)      (13,471)          (17,802)   
 Proceeds from maturities of investment securities                    
   available-for-sale                                            500     6,002         2,500             9,002 
 Principal repayments and proceeds from maturities
   of mortgage-backed securities                                  11         8            28                24 
 Purchase of Federal Home Loan Bank of Atlanta
   stock                                                        (166)     (435)         (166)             (435)  
 Purchase of property and equipment                             (483)     (363)       (2,363)           (1,446)
 Proceeds from sale of property and equipment                      -         -             3                 -   
                                                             --------   -------      -------         ---------
       Net cash used in investing activities                  (2,480)  (15,118)      (32,166)          (57,145)
                                                             --------   -------      -------         --------- 
CASH FLOWS FROM FINANCING ACTIVITIES:
 Net increase in deposits                                      7,527     4,949        30,860            29,855
 Dividends paid                                                 (695)     (608)       (2,035)           (1,220) 
 Advances from Federal Home Loan Bank of Atlanta                   -     2,000        10,000             2,000
 Purchase of treasury stock                                        -         -       (20,955)                -
 Stock subscription refunds                                        -         -             -          (197,851)   
 Stock issuance costs                                              -         -             -            (1,584)
                                                             -------    ------      --------         ---------
       Net cash provided by (used in) financing activities   $ 6,832    $6,341      $ 17,870        $ (168,800)  
                                                             -------    ------      --------         ---------
</TABLE> 

                                       4


<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                                   THREE MONTHS ENDED              NINE MONTHS ENDED     
                                                                        MARCH 31,                       MARCH 31,        
                                                                1999             1998            1999           1998     
                                                             ---------       ---------      ---------      ---------- 
<S>                                                          <C>             <C>            <C>            <C>           
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         $   2,733       $  (8,976)     $ (13,046)     $  (219,924)  
                                                                                                                         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                33,189          66,124         48,968          277,072   
                                                             ---------       ---------      ---------      -----------   

CASH AND CASH EQUIVALENTS AT END OF PERIOD                   $  35,922       $  57,148      $  35,922      $    57,148   
                                                             =========       =========      =========      ===========   
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                       
  Cash paid during the period for:                                                                                       
     Interest                                                $   4,347       $   4,417      $  13,449      $    13,021   
                                                             =========       =========      =========      ===========   
     Income taxes                                            $   1,425       $   1,516      $   4,609      $     3,876   
                                                             =========       =========      =========      ===========   
  Non-cash transactions:                                                                                                 
     Transfers from loans to real estate acquired in                                                                     
       settlement of loans                                   $       2       $      --      $       2      $        --   
                                                             =========       =========      =========      ===========   
     Change in unrealized (loss) gain on investment                                                                      
       securities available-for-sale                         $     (27)      $      (1)     $     (34)     $        18    
                                                             =========       =========      =========      ===========   
     Change in deferred taxes related to unrealized                                                                      
       loss (gain) on investment securities                                                                              
       available-for-sale                                    $       9       $       1      $      12      $        (7)   
                                                             =========       =========      =========      ===========  
     Issuance of common stock to MRDP                        $      --       $      --      $   7,443      $        --   
                                                             =========       =========      =========      ===========   
     Sale of common stock funded by subscription                                                                         
       escrow accounts                                       $      --       $      --      $      --      $    61,478   
                                                             =========       =========      =========      ===========  
     Sale of common stock funded by deposit accounts         $      --       $      --      $      --      $    20,042   
                                                             =========       =========      =========      ===========   
     Sale of common stock to ESOP                            $      --       $      --      $      --      $        --    
                                                             =========       =========      =========      ===========  
</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, was incorporated on February 4, 1997 for the purpose of
     becoming the holding company for First Federal Bank ("First Federal" or the
     "Bank") upon the Bank's conversion from a federally chartered mutual
     savings association to a federally chartered stock savings association
     ("Conversion"). The Conversion was completed on July 8, 1997 through the
     sale and issuance of 4,430,375 shares of common stock by the Company.

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

     The results of operations for the three and nine months ended March 31,
     1999 are not necessarily indicative of the results to be expected for the
     year ending June 30, 1999. The consolidated financial statements and notes
     thereto should be read in conjunction with the audited financial statements
     and notes thereto for the year ended June 30, 1998.

2.   EARNINGS PER SHARE

     Earnings per share ("EPS") has been computed based upon weighted average
     common shares outstanding of 3,484,336 and 4,098,436, respectively, for the
     three months ended March 31, 1999 and 1998 and weighted average common
     shares outstanding of 3,717,550 and 4,088,141, respectively, for the nine
     months ended March 31, 1999 and 1998. For the purposes of computing
     weighted average shares outstanding for the nine months ended March 31,
     1998, shares issued in the Conversion on July 8, 1997 were assumed to have
     been outstanding since July 1, 1997. The Company had no dilutive securities
     outstanding during the three and nine months ended March 31, 1999 and 1998;
     therefore, diluted EPS is the same as basic EPS for all periods.

3.   SHARE REPURCHASES

     Cumulative share repurchases for the nine months ended March 31, 1999 were
     642,405 at an average price of $32.62 per share.

                                       6
<PAGE>
 
4.   COMPREHENSIVE INCOME

     Effective July 1, 1998, the Company adopted the provisions of Statement of
     Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
     Income."  In accordance with the provisions of SFAS No. 130, comparative
     financial statements presented for earlier periods have been reclassified
     to reflect the provisions of this Statement.  Comprehensive income is the
     change in the Company's equity during the period from transactions and
     other events and circumstances.  Comprehensive income is divided into net
     income and other comprehensive income.  The Company's "other comprehensive
     income" for the three and nine months ended March 31, 1999 and 1998 and
     "accumulated other comprehensive income" as of March 31, 1999 and 1998 are
     comprised solely of unrealized gains and losses on investment securities
     available-for-sale.

     Comprehensive income for the three- and nine-month periods ended March 31,
     1999 and 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED     NINE MONTHS ENDED 
                                                     MARCH 31,             MARCH 31,                                  
                                                     ---------             ---------                                  
                                                  1999      1998         1999      1998                               
                                                  ----      ----         ----      ----                               
    <S>                                          <C>       <C>          <C>       <C> 
    Net income                                   $1,611    $1,877       $4,893    $5,671 
 
    Other comprehensive income (loss) -
      Unrealized gains (losses) on investment
      securities available-for-sale arising
      during the period, net of income taxes        (17)        -          (22)       11
                                                 ------    ------       ------    ------
 
    Total comprehensive income                   $1,594    $1,877       $4,871    $5,682
                                                 ======    ======       ======    ======
</TABLE>

5.   STOCK COMPENSATION PLANS

     RESTRICTED STOCK PLAN - On July 8, 1998, 177,215 shares of restricted stock
     were awarded to participants in the FirstSpartan Financial Corp. Management
     Recognition and Development Plan ("MRDP") which was approved at the
     Company's Annual Meeting of Stockholders on January 21, 1998.  The stock
     awards vest over a five-year period.  The stock was issued from the 177,215
     shares held as treasury stock on the date of the grant.  The Company
     recorded the stock awards at the market value on the date of grant ($42.00
     per share) as unearned compensation in stockholders' equity and will
     amortize it over the vesting period.

                                       7
<PAGE>
 
     STOCK OPTION PLAN - On July 8, 1998, the Company granted options to
     purchase 363,291 shares of Company stock at $42.00 per share to 17 officers
     and directors of the Company and the Bank under the 1997 FirstSpartan
     Financial Corp. Stock Option Plan which was approved at the Company's
     Annual Meeting of Stockholders on January 21, 1998.
 
     On October 21, 1998, the Compensation Committee of the Board of Directors
     determined that because of the decline in market value of the Company's
     stock such a short time after the granting of the stock options, the
     desired incentive effect for employee performance was diminished
     significantly. Accordingly, the Committee recommended, and the Board of
     Directors approved, the repricing of all options granted on July 8, 1998.
     On October 28, 1998, the Committee repriced the options at the fair market
     value of the stock that day which was $33.75 per share. Since the repricing
     was at market value, no compensation was recorded as a result of the
     repricing.

     Additionally, on October 28, 1998, an additional 50,000 options were
     awarded at $33.75 per share to 22 employees and officers of the Bank in
     order to provide incentives on a broader scale. None of these employees and
     officers were included in the original grant of 363,291 options.

     At March 31, 1999 no options had been exercised and no options had expired
     under the plan.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND JUNE 30, 1998

     Total assets were $541.0 million at March 31, 1999 and $517.4 million at
     June 30, 1998, an increase of $23.6 million or 5%. This increase resulted
     primarily from a $22.5 million, or 5%, increase in loans receivable, net
     (including loans held-for-sale), an increase of $10.9 million, or 38%, in
     securities available-for-sale, and an increase of $1.8 million, or 21%, in
     office properties and equipment, net offset by a decrease of $13.1 million,
     or 27%, in cash and cash equivalents. Loans receivable, net, increased
     primarily as a result of an increase of $14.4 million in mortgage loans
     since June 30, 1998. Included in the $14.4 million increase were increases
     of $14.0 million in construction loans, $8.7 million in commercial mortgage
     loans and $1.7 million in land development loans, which more than offset a
     decrease of $10.1 million in one- to four-family mortgage loans. The
     primary factor contributing to the decrease in one- to four-family mortgage
     loans was the sale of $46.6 million of loans in the secondary market.
     Offsetting loan sales was the purchase of $50.1million of one- to four-
     family mortgage loans. Loans receivable, net, also increased due to a $5.5
     million increase in non-mortgage commercial loans and a $1.2 million
     increase in home equity loans. The increase in loans receivable, net, was
     funded primarily through an increase in deposits and FHLB advances.

     Deposit accounts increased $30.9 million to $400.7 million at March 31,
     1999 from $369.8 million at June 30, 1998. The increase in deposits
     resulted primarily from newly opened branch offices and, to a lesser
     extent, interest credited to deposit accounts during the period. Advances
     from the FHLB of Atlanta increased $10.0 million to $27.0 million at March
     31, 1999 from $17.0 million at June 30, 1998.

                                       8
<PAGE>
 
     Stockholders' equity decreased by $16.4 million to $109.4 million at March
     31, 1999 from $125.8 million at June 30, 1998. Items that decreased
     stockholders' equity were the purchase of $21.0 million of treasury stock
     and payment of dividends of $2.0 million. Offsetting these charges to
     stockholders' equity were the allocation of shares in the amount of $1.8
     million under the Bank's Employee Stock Ownership Plan ("ESOP") and
     restricted stock plan and net income of $4.9 million for the nine months
     ended March 31, 1999.

     Nonperforming assets increased by $100,000 to $1.5 million at March 31,
     1999 from $1.4 million at June 30, 1998. The increase was due to a $100,000
     increase in nonaccrual loans.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
MARCH 31, 1998

     NET INCOME. Net income decreased $300,000 to $1.6 million for the three
     months ended March 31, 1999 from $1.9 million for the three months ended
     March 31, 1998. The decrease for the quarter was attributable to an
     increase in noninterest expense in the quarter ended March 31, 1999
     compared to the quarter ended March 31, 1998 due primarily to compensation
     expense associated with the adoption of the MRDP and costs associated with
     the hiring of personnel at newly opened branch offices. Offsetting the
     above items that decreased net income in the quarter ended March 31, 1999
     was an increase in noninterest income of $400,000 primarily related to
     mortgage loan sales. Although net income decreased for the quarter ended
     March 31, 1999, earnings per share did not change from $0.46 earned during
     the quarter ended March 31, 1998 due to fewer shares outstanding during the
     quarter ended March 31, 1999 as the result of share repurchases.

     NET INTEREST INCOME. Net interest income was $5.1 million for the three
     months ended March 31, 1999 and 1998. Growth in interest-earning assets was
     offset by an increase in interest-bearing liabilities and a decrease in net
     yield on interest-earning assets in the quarter ended March 31, 1999
     compared to the quarter ended March 31, 1998.

     Investment income increased $200,000 to $9.5 million for the quarter ended
     March 31, 1999 from $9.3 million for the quarter ended March 31, 1998 as a
     result of the increase in the average balances of interest-earning assets
     to $508.5 million from $479.0 million more than offsetting the decrease in
     average yield to 7.51% from 7.75%. Although interest-earning assets were
     higher in the quarter ended March 31, 1999 as compared to March 31, 1998,
     share repurchases of approximately $21.0 million since the quarter ended
     March 31, 1998 significantly offset asset growth and, accordingly,
     investment income.

                                       9
<PAGE>
 
     Interest expense increased $300,000 to $4.5 million for the three months
     ended March 31, 1999 from $4.2 million for the three months ended March 31,
     1998.  The increase was due primarily to an increase in the average balance
     of interest-bearing liabilities to $420.9 million from $359.2 million more
     than offsetting a decrease in the average cost of interest-bearing
     liabilities to 4.33% from 4.73%. The average balance increased as the
     result of deposits obtained through newly opened branch offices and various
     deposit promotions as well as an increase in FHLB advances since the prior
     year's comparable quarter.  The decrease in the average cost is
     attributable to the decrease in prevailing market rates since the quarter
     ended March 31, 1998.

     Net yield on interest-earning assets decreased to 3.97% for the quarter
     ended March 31, 1999 from 4.25% for the quarter ended March 31, 1998 due
     primarily to the above mentioned decrease in the average yield on interest-
     earning assets.

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

     The provision for loan losses was $200,000 for the three months ended March
     31, 1999 compared to $130,000 for the three months ended March 31, 1998.
     The provision for loan losses has increased over the past several quarters
     primarily as the result of the increase in the amount of consumer and
     commercial loans in the Company's loan portfolio.  Management believes that
     such loans present a higher risk of credit loss relative to one- to four-
     family mortgage loans and accordingly, a higher allowance for loan losses
     is warranted.  The allowance for loan losses represents an amount that
     management believes will be adequate to absorb estimated losses inherent in
     the total loan portfolio which may become uncollectible.  Factors
     considered in assessing the adequacy of the allowance include historical
     loss experience, delinquency trends, characteristics of specific loan
     types, growth and composition of the loan portfolios, loans classified
     under OTS regulations, and other factors. Management deemed the allowance
     for loan losses to be adequate at March 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 accrual of interest is ceased when, in the opinion of management,
     principal or interest payments are not likely to continue according to the
     terms of the loan agreement, or when principal or interest is 90 days or
     more past due.  In certain cases, extensions are granted on construction
     loans that are past due 90 days or more.  These extensions are granted
     based upon management's judgment of the creditworthiness of the borrower
     and other factors such as sales contracts pending on the property held as
     collateral.  In the case of extended loans, interest continues to accrue
     and the loans are reported as accruing but contractually past due 90 days
     or more.  Management considers the total of nonaccrual loans and accruing
     loans 90 days or more past due as nonperforming loans.

                                       10
<PAGE>
 
     NONINTEREST INCOME.   Noninterest income increased by $433,000 to $1.1
     million for the three months ended March 31, 1999 from $651,000 for the
     three months ended March 31, 1998, primarily as a result of an increase in
     gain on sale of mortgage loans to $366,000 in the three months ended March
     31, 1999 from $102,000 in the three months ended March 31, 1998.  The Bank
     periodically sells loans in response to interest rate changes, liquidity
     needs and other factors.  The Bank sold approximately $17.2 million of
     mortgage loans during the quarter ended March 31, 1999 primarily to reduce
     the amount of fixed rate loans in the loan portfolio.  Management cannot
     predict whether there will be any such gains in the future.

     Service charges and fees increased to $537,000 for the three months ended
     March 31, 1999 from $375,000 for the three months ended March 31, 1998
     primarily as a result of increased deposit account fees, particularly on
     the increased number of NOW accounts.

     NONINTEREST EXPENSE.   Noninterest expense was $3.2 million for the three
     months ended March 31, 1999 compared to $2.5 million for the same period in
     1998.  The increase consisted principally of increased employee
     compensation and benefits which increased to $1.8 million for the three
     months ended March 31, 1999 from $1.2 million for the three months ended
     March 31, 1998.  The increase in compensation expense is attributable
     principally to the adoption of the MRDP and costs associated with the
     hiring of personnel at newly opened branch offices, offset by a decrease in
     ESOP expense due to a lower average stock price used to determine related
     compensation expense.  The increases in other categories of other operating
     expenses generally are attributable to the growth of the Company and to
     inflation.  The Company anticipates that other operating expenses will
     continue to increase in subsequent periods until the new branches that were
     opened in 1998 and the announced, but not yet opened, branch in Chesnee,
     South Carolina become fully operational.

     INCOME TAXES.   The provision for income taxes decreased $88,000 to $1.1
     million for the three months ended March 31, 1999 compared to the three
     months ended March 31, 1998 as a result of lower income before income
     taxes.

COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 1999 AND
MARCH 31, 1998

     NET INCOME.   Net income decreased $800,000 to $4.9 million for the nine
     months ended March 31, 1999 from $5.7 million for the nine months ended
     March 31, 1998.  The decrease for the nine months was attributable to an
     increase of $2.1 million in noninterest expense to $9.3 million in the nine
     months ended March 31, 1999 from $7.2 million in the nine months ended
     March 31, 1998 due primarily to compensation expense associated with the
     adoption of the MRDP and costs associated with the hiring of personnel at
     newly opened branch offices.  Offsetting the above items that decreased net
     income in the nine months ended March 31, 1999 was an increase in
     noninterest income of $1.4 million primarily related to mortgage loan sales
     and a decrease of $300,000 in the provision for income taxes due to lower
     income before income taxes.  Earnings per share for the nine months ended
     March 31, 1999 was $1.32 compared to $1.39 for the nine months ended March
     31, 1998.

                                       11
<PAGE>
 
     NET INTEREST INCOME.   Net interest income was $15.1 million for the nine
     months ended March 31, 1999 and 1998.  Growth in interest-earning assets
     was offset by an increase in interest-bearing liabilities and a decrease in
     net yield on interest-earning assets in the nine months ended March 31,
     1999 compared to the nine months ended March 31, 1998. Another factor that
     affected net interest income was net interest earnings of approximately
     $300,000 on excess stock subscription funds held and refunded in connection
     with the Bank's conversion from the mutual to stock form of ownership in
     the nine months ended March 31, 1998, which were absent in the nine months
     ended March 31, 1999.

     Investment income increased $1.0 million to $28.9 million for the nine
     months ended March 31, 1999 from $27.9 million for the nine months ended
     March 31, 1998 as a result of the increase in the average balances of
     interest-earning assets to $505.6 million from $477.5 million (including
     the previously mentioned stock subscription funds) more than offsetting the
     decrease in average yield to 7.61% from 7.79%.  Although interest-earning
     assets were higher during the nine months ended March 31, 1999 as compared
     to March 31, 1998, share repurchases of approximately $21.0 million since
     the nine months ended March 31, 1998 significantly offset asset growth and,
     accordingly, investment income.
 
     Interest expense increased $900,000 to $13.7 million for the nine months
     ended March 31, 1999 from $12.8 million for the nine months ended March 31,
     1998.  The average balance of interest-bearing liabilities increased to
     $408.2 million in the nine months ended March 31, 1999 compared to $360.7
     million (including the previously mentioned stock subscription funds) in
     the comparable prior year period.  The impact of increased balances of
     interest-bearing liabilities on interest expense was more than offset by a
     decrease in the average cost to 4.48% from 4.72% for the nine months ended
     March 31, 1999 and 1998, respectively.  The average balance increased as
     the result of deposits obtained through newly opened branch offices and
     various deposit promotions as well as increased FHLB advances.  The
     decrease in the average cost is attributable to the decrease in prevailing
     market rates since March 31, 1998.

     Net yield on interest-earning assets decreased to 3.99% for the nine months
     ended March 31, 1999 from 4.22% for the nine months ended March 31, 1998
     due primarily to the above mentioned decrease in the average yield on
     interest-earning assets.

     PROVISION FOR LOAN LOSSES.  The provision for loan losses was $600,000 for
     the nine months ended March 31, 1999 compared to $310,000 for the nine
     months ended March 31, 1998.  See "Comparison of Operating Results for the
     Three Months Ended March 31, 1999 and March 31, 1998 - Provision for Loan
     Losses" for a discussion of management's process for determining the
     provision for loan losses.

     NONINTEREST INCOME.  Noninterest income increased by $1.4 million to $3.0
     million for the nine months ended March 31, 1999 from $1.6 million for the
     nine months ended March 31, 1998, primarily as a result of an increase in
     gain on sale of mortgage loans to $1.0 million in the nine months ended
     March 31, 1999 from $102,000 in the nine months ended March 31, 1998.  The
     Bank periodically sells loans in response to interest rate changes,
     liquidity needs and other factors.  The Bank sold mortgage loans during the
     quarter ended March 31, 1999 primarily to reduce the amount of fixed rate
     loans in the loan portfolio.  Management cannot predict whether there will
     be any such gains in the future.

                                       12
<PAGE>
 
     Service charges and fees increased to $1.5 million for the nine months
     ended March 31, 1999 from $1.1 million for the nine months ended March 31,
     1998 primarily as a result of increased deposit account fees, particularly
     on the increased number of NOW accounts.

     NONINTEREST EXPENSE.   Noninterest expense was $9.3 million for the nine
     months ended March 31, 1999 compared to $7.2 million for the same period in
     1998.  The increase consisted principally of increased employee
     compensation and benefits which increased to $5.3 million for the nine
     months ended March 31, 1999 from $3.7 million for the nine months ended
     March 31, 1998. The increase in compensation expense is attributable
     principally to the adoption of the MRDP and costs associated with the
     hiring of personnel at newly opened branch offices offset by a decrease in
     ESOP expense due to a lower average stock price used to determine related
     compensation expense.  The increases in other categories of other operating
     expenses generally are attributable to the growth of the Company and to
     inflation.  The Company anticipates that other operating expenses will
     continue to increase in subsequent periods until the new branches that were
     opened in 1998 and the announced, but not yet opened, branch in Chesnee,
     South Carolina become fully operational.

     INCOME TAXES.   The provision for income taxes was $3.3 million for the
     nine months ended March 31, 1999 compared to $3.6 million for the nine
     months ended March 31, 1998 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 and FHLB of Atlanta advances.  While maturities and scheduled
     amortization of loans are a predictable source of funds, deposit flows and
     mortgage prepayments are influenced greatly by general interest rates,
     other economic conditions and competition.  Federal regulations require the
     Bank to maintain an adequate level of liquidity to ensure the availability
     of sufficient funds to fund loan originations, deposit withdrawals and to
     satisfy other financial commitments.  Currently, the federal regulatory
     liquidity requirement for the Bank is the maintenance of an average daily
     balance of liquid assets (cash and eligible investments) equal to at least
     4% of the average daily balance of net withdrawable deposits and short-term
     borrowings.  This liquidity requirement is subject to periodic change.  The
     Company and the Bank generally maintain sufficient cash and short-term
     investments to meet short-term liquidity needs.  At March 31, 1999, cash
     and cash equivalents totaled $35.9 million, or 7% of total assets, and
     investment securities classified as available-for-sale with maturities of
     one year or less totaled $33.1 million or 6% of total assets.  At March 31,
     1999, the Bank also maintained an uncommitted credit facility with the FHLB
     of Atlanta, which provides for immediately available advances up to an
     aggregate amount of $75.0 million of which $27.0 million had been advanced.

     FirstSpartan is not subject to any separate regulatory capital
     requirements.  As of March 31, 1999, the Bank's regulatory capital was in
     excess of all applicable regulatory requirements.  At March 31, 1999, under
     applicable regulations, the Bank's actual tangible, core and risk-based
     capital ratios were 16.8%, 16.8% and 26.2%, respectively, compared to
     requirements of 1.5%, 3.0% and 8.0%, respectively.

                                       13
<PAGE>
 
     At March 31, 1999, the Company had loan commitments (excluding undisbursed
     portions of interim construction loans) of approximately $6.9 million ($1.9
     million at fixed rates ranging from 6% to 9%). In addition, at March 31,
     1999, the unused portion of lines of credit (principally variable rate home
     equity lines of credit) extended by the Company was approximately $50.1
     million.  Furthermore, at March 31, 1999, the Company had certificates of
     deposit scheduled to mature in one year or less of $166.7 million.  Based
     on historical experience, the Company anticipates that a majority of such
     certificates of deposit will be renewed at maturity.

YEAR 2000

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

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

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

                                       14
<PAGE>
 
     In addition to addressing its own Year 2000 issues, the Bank is continuing
     to assess the impact of the Year 2000 on significant commercial borrowers.
     To date, based on written representations from borrowers, the Bank has
     determined that substantially all such borrowers have either (a) completed
     Year 2000 systems replacement or renovation or (b) developed Year 2000
     remediation plans. The Bank continues to monitor those borrowers whose
     plans have not yet been completed. Based upon borrowers' representations,
     the Bank believes that its significant commercial borrowers will have Year
     2000 compliant systems in place before December 31, 1999. However, those
     borrowers cannot give assurance that their customers or suppliers will be
     Year 2000 compliant before December 31, 1999. The Bank is unable to
     determine the impact upon collections on these loans should either the
     borrowers' representations prove inaccurate or their suppliers or customers
     not be Year 2000 compliant.

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

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

          .    BISYS could experience unforseen system(s) failure resulting in
               the inability to access customer accounts and process
               transactions;

          .    Loss of utilities could cause major disruptions of business.
               Should the Bank lose power, it would lose the ability to operate
               electronic equipment to access customer accounts. Should
               telephone service be disrupted the Bank would lose the ability to
               communicate with BISYS, which again would prohibit access to
               customer accounts;

          .    Failures in the payments system could cause a severe disruption
               to the Bank's business. These failures could occur in the Federal
               Reserve Banks, correspondent banks or electronic payments
               clearing houses. These failures could cause processing backlogs
               and could affect the Bank's ability to process customer deposits
               and withdrawals as well as fund loans;

          .    Failures of the Bank's correspondent banks such as the Federal
               Home Loan Bank of Atlanta could impair the Bank's liquidity and
               the ability to process certain payments;

          .    Loss of customer confidence that the Bank or the banking system
               in general will be Year 2000 compliant could cause excessive
               deposit withdrawals impairing the Bank's liquidity.

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

                                       15
<PAGE>
 
     There can be no assurances that the Bank, BISYS, other third-party
     processors, government agencies, utility companies, correspondent banks or
     any other vendor upon which the Bank relies will effectively address the
     Year 2000 problem.  Year 2000 failures by any of the above mentioned
     parties could cause a material adverse affect on the Bank and the Company.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of March 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,
     1998.

                                       16
<PAGE>
 
                 FIRSTSPARTAN FINANCIAL CORP. AND SUBSIDIARIES

PART II.  OTHER INFORMATION

ITEM 1.   Legal Proceedings
          -----------------

          Not applicable

ITEM 2.   Changes in Securities and Use of Proceeds
          -----------------------------------------

          Not applicable

ITEM 3.   Defaults Upon Senior Securities
          -------------------------------

          Not applicable

ITEM 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

          Not applicable

ITEM 5.   Other Information
          -----------------

          Not applicable

                                       17
<PAGE>
 
ITEM 6.   Exhibits and Reports on Form 8-K
          --------------------------------

          (a)  Exhibits


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

          (b)  Reports on Form 8-K:

               None.



_________________________
*    Filed as an exhibit to the Registrant's Registration Statement on Form S-1
     (333-23015) and incorporated herein by reference.
**   Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
     fiscal year ended June 30, 1998 and incorporated herein by reference.
***  Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
     the quarter ended March 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.

                                       18
<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: May 14, 1999             By: /s/ Billy L. Painter            
     --------------               --------------------------       
                                  Billy L. Painter                    
                                  President and Chief Executive Officer
                                                                    
                                                                    
Date: May 14, 1999             By: /s/ R. Lamar Simpson     
     --------------               --------------------------        
                                  R. Lamar Simpson                      
                                  Treasurer, Secretary and Chief Financial
                                  Officer

                                       19