<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                  For the quarterly period ended March 31, 1998
                                                 --------------


                         Commission File Number 0-18513
                                                -------

                            SKANEATELES BANCORP, INC.
                            -------------------------
             (Exact name of registrant as specified in its charter)


                   Delaware                                 16-1368745
                   --------                                 ----------
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                         Identification No.)


                 33 E. Genesee St., Skaneateles, New York, 13152
                 -----------------------------------------------
                (Address of principal executive offices-Zip code)


         Registrant's telephone number, including area code 315-685-2265
                                                           --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by sections 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 for each of the issuer's classes of
common stock, as of the latest practicable date.


                        Class Outstanding at May 11, 1998
                        ---------------------------------
Common Stock (par value $.01 per share)                 1,442,614 Shares







                                       1
<PAGE>   2


PART I. FINANCIAL INFORMATION                                            Page
-----------------------------                                            ----

         Item 1.  Consolidated Financial Statements
         ------
                  Consolidated Balance Sheets                                 3

                  Consolidated Statements of Income                           4

                  Consolidated Statements of  Stockholders' Equity            5

                  Consolidated Statements of Cash Flows                       6

                  Notes to Consolidated Financial Statements                  7

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

         Item 3.    Quantitative and Qualitative Disclosures About 
         -------    Market Risk                                              17

PART II. OTHER INFORMATION
--------------------------

         Item 1.  Legal Proceedings                                          18
         ------
         Item 2.  Changes in Securities                                      18
         ------
         Item 3.  Defaults Upon Senior Securities                            18
         ------
         Item 4.  Submission of Matters to a Vote of Security Holders        18
         ------
         Item 5.  Other Information                                          19
         ------
         Item 6.  Exhibits and Reports on Form 8-K                           19
         ------

SIGNATURES                                                                   20
----------




                                       2
<PAGE>   3


<TABLE>
<CAPTION>
SKANEATELES BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                                 
                                                                                March 31,      December 31,
ASSETS                                                                             1998              1997
-----------------------------------------------------------------------------------------------------------
                                                                         (In Thousands, Except Share Data)
<S>                                                                             <C>                <C>  
Cash and due from banks                                                         $   6,815          9,658
Federal funds sold                                                                 12,700          6,700
Securities available for sale, at fair value                                        7,347          8,416
Securities held to maturity, fair value of
  $7,790 in 1998 and $7,935 in 1997                                                 7,571          7,705
Federal Home Loan Bank stock, at cost                                               1,561          1,561
Mortgage loans                                                                    149,099        153,312
Other loans and leases                                                             65,085         61,243
-----------------------------------------------------------------------------------------------------------
                                                                                  214,184        214,555
         Net deferred costs                                                           475            467
         Allowance for loan losses                                                 (2,589)        (2,560)
-----------------------------------------------------------------------------------------------------------
         Loans, net                                                               212,070        212,462
Premises and equipment, net                                                         6,153          6,155
Real estate owned, net                                                                892            951
Accrued interest receivable                                                         1,273          1,372
Other assets                                                                        1,223          1,121
-----------------------------------------------------------------------------------------------------------
                                                                                $ 257,605        256,101
===========================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------
Liabilities:
   Interest bearing deposits                                                    $ 197,450        196,213
   Demand deposits                                                                 20,897         20,236
-----------------------------------------------------------------------------------------------------------
       Total deposits                                                             218,347        216,449

   Advance payments by borrowers for property taxes and insurance                   1,081          1,569
   Borrowings                                                                      18,286         18,057
   Accrued expenses and other liabilities                                           1,920          2,355
-----------------------------------------------------------------------------------------------------------
            Total liabilities                                                     239,634        238,430
-----------------------------------------------------------------------------------------------------------

Stockholders' equity:
   Preferred stock, par value $.01 per share,
      authorized 500,000 shares, none issued                                            0              0
   Common stock, par value $.01 per share, authorized 2,500,000 shares,
      1,440,122 and 1,435,992 shares issued in 1998 and 1997, respectively
                                                                                       14             14
   Additional paid-in capital                                                       9,170          9,119
   Retained earnings                                                                8,819          8,573
   Accumulated other comprehensive income                                             (32)           (35)
-----------------------------------------------------------------------------------------------------------
            Total stockholders' equity                                             17,971         17,671
-----------------------------------------------------------------------------------------------------------
                                                                                $ 257,605        256,101
===========================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

                                       3
<PAGE>   4
<TABLE>
<CAPTION>
SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

                                                       Three months ended March 31,
                                                           1998               1997
----------------------------------------------------------------------------------------
                                                (In Thousands, Except Per Share  Data)
Interest income:
<S>                                                         <C>            <C>  
   Mortgage loans                                           $2,988         3,227
   Other loans                                               1,493         1,005
   Securities                                                  279           294
   Federal funds sold                                          124            46
----------------------------------------------------------------------------------------
           Total interest income                             4,884         4,572
----------------------------------------------------------------------------------------
Interest expense:
   Deposits                                                  2,086         2,040
   Borrowings                                                  290           290
----------------------------------------------------------------------------------------
            Total interest expense                           2,376         2,330
----------------------------------------------------------------------------------------

            Net interest income                              2,508         2,242
Provision for loan losses                                      100           100
----------------------------------------------------------------------------------------
            Net interest income after provision
               for loan losses                               2,408         2,142
----------------------------------------------------------------------------------------
Other operating income :
   Net gain on sale of loans                                    21            50
   Service charges                                             365           297
   Other                                                        84            74
----------------------------------------------------------------------------------------
          Total other operating income                         470           421
----------------------------------------------------------------------------------------
                                                             2,878         2,563
----------------------------------------------------------------------------------------
Other operating expenses:
   Salaries and employee benefits                              949           886
   Building, occupancy and equipment                           397           305
   Data processing                                             134            81
   Correspondent bank fees                                     129            91
   Advertising and promotions                                   68            47
   Postage and delivery                                        130           147
   Stationery and supplies                                      63            49
   Deposit insurance                                             5             6
   Real estate owned, net                                       34             7
   Other                                                       432           320
----------------------------------------------------------------------------------------
            Total other operating expenses                   2,341         1,939
----------------------------------------------------------------------------------------
            Income before income taxes                         537           624
Income tax                                                     190           222
----------------------------------------------------------------------------------------
            Net income                                      $  347           402
----------------------------------------------------------------------------------------
Net income per common share - basic                         $ 0.24          0.28

Net income per common share - diluted                       $ 0.23          0.28
----------------------------------------------------------------------------------------
</TABLE>




See accompanying notes to consolidated financial statements.

                                       4
<PAGE>   5

<TABLE>
<CAPTION>
SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

                                                                                Accumulated
                                                          Additional              other
                                                  Common   paid-in-   Retained comprehensive
                                                  stock     capital   earnings    income   Total
---------------------------------------------------------------------------------------------------
                                                             (In Thousands)
--------------------------------------------------------------------------------------------------

<S>                                               <C>       <C>       <C>        <C>      <C>   
Balance at December 31, 1996                      $   9     8,978     7,300      (57)     16,230

Comprehensive Income:
  Net income                                          0         0       402        0         402

  Change in net unrealized gain on securities,       
    net of tax effect of $2                           0         0         0       (7)         (7)
--------------------------------------------------------------------------------------------------
     Total comprehensive income                       0         0       402       (7)        395

Sale of 4,200 shares under option                     1        24         0        0          25

Issuance of 996 shares of stock under
 1995 Non-employee Director's Stock Plan              0        11         0        0          11

Issuance of 742 shares of stock under
 Dividend Reinvestment Plan                           0         9         0        0           9

Cash dividend declared on
 Common stock ($.07 per share)                        0         0       (95)       0         (95)
--------------------------------------------------------------------------------------------------
Balance at March 31, 1997                         $  10     9,022     7,607      (64)     16,575
===================================================================================================


--------------------------------------------------------------------------------------------------
Balance at December 31, 1997                      $  14     9,119     8,573      (35)     17,671


Comprehensive Income:
  Net income                                          0         0       347        0         347

  Change in net unrealized gain on securities,     
    net of tax effect of $2                           0         0         0        3          3
--------------------------------------------------------------------------------------------------
     Total comprehensive income                       0         0       347        3         350

Sale of 2,605 shares under option                     0        21         0        0          21

Issuance of 685 shares of stock under
 1995 Non-employee Director's Stock Plan              0        15         0        0          15

Issuance of 482 shares of stock under
 Dividend Reinvestment Plan                           0         9         0        0           9

Issuance of 358 shares of stock under
 1997 Employee Stock Purchase Plan                    0         6         0        0           6

Cash dividend declared on
 Common stock ($.07 per share)                        0         0      (101)       0        (101)
--------------------------------------------------------------------------------------------------
Balance at March 31, 1998                         $  14     9,170     8,819      (32)     17,971
===================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>   6



<TABLE>
<CAPTION>
SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                      Three months ended March 31,
                                                                        1998         1997
--------------------------------------------------------------------------------------------------
                                                                        (In Thousands)
<S>                                                                  <C>             <C>
Operating activities
Net Income                                                           $    347        402

Adjustments to reconcile net income to net cash
provided by (used in) operating activities
  Provision for loan losses                                               100        100
  Provision for losses on real estate owned                                30          0
  Depreciation and amortization                                           197        160
  Mortgage loans originated for sale                                   (2,637)      (888)
  Proceeds from sale of loans originated for sale                       2,547      1,440
  Net (increase) decrease in interest receivable                           99        (74)
  Net decrease in other liabilities                                      (436)      (756)
  Loss on disposal of computer equipment                                   38          0
  Other, net                                                             (217)      (279)
--------------------------------------------------------------------------------------------------
        Total adjustments                                                (279)      (297)
--------------------------------------------------------------------------------------------------
        Net cash provided by operating activities                          68        105
Investing activities
  Proceeds from maturities of securities available for sale             1,000          4
  Proceeds from maturities of securities held to maturity                  30        262
  Principal collected on asset-backed securities                          239        364
  Purchase of Federal Home Loan Bank stock                                  0       (151)
  Net increase in loans made to customers                                 357     (1,161)
  Proceeds from sale of real estate owned                                  54          0
  Purchase of property and equipment, net                                (180)       (48)
--------------------------------------------------------------------------------------------------
        Net cash provided by (used in) investing activities             1,500       (730)
Financing activities:
  Net decrease in time certificates                                      (682)    (2,885)
  Net increase in other deposits                                        2,092      2,549
  Increase (decrease) in overnight borrowings                             234       (254)
  Increase in long-term borrowings                                          0        500
  Repayment of long-term borrowings                                        (5)      (260)
  Proceeds from issuance of stock pursuant to stock plans                  51         45
  Dividends paid                                                         (101)       (95)
--------------------------------------------------------------------------------------------------
       Net cash provided by (used in) financing activities              1,589       (400)
--------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                    3,157     (1,025)
Cash and cash equivalents at beginning of period                       16,358      9,526
--------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                           $ 19,515      8,501
==================================================================================================
Interest paid                                                           2,370      2,324
Income taxes paid                                                          14          3
Supplemental schedule of noncash investing activities:
   Mortgage loans foreclosed and transferred to real estate owned          25          0
==================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.



                                       6




<PAGE>   7



                            SKANEATELES BANCORP, INC.
                   Notes to Consolidated Financial Statements

1.   Summary of Significant Accounting Policies

Business
Skaneateles Bancorp, Inc. (the Company) is a bank holding company registered
under the Bank Holding Company Act of 1956. The results of the Company are
largely dependent upon the results of Skaneateles Savings Bank (the Bank), its
sole subsidiary. Skaneateles Savings Bank is a full service retail bank.

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.

The data in the consolidated balance sheet for December 31, 1997 was derived
from the Company's 1997 Annual Report to Stockholders. That data, along with the
other interim financial information presented in the consolidated balance
sheets, statements of income, statements of stockholders' equity and cash flows
should be read in conjunction with the consolidated financial statements,
including the notes thereto, contained in the 1997 Annual Report to
Stockholders.

Opinion of Management
The interim financial statements of the Company included in this Report reflect
all adjustments which are, in the opinion of management, necessary to present a
fair statement of the financial condition of the Company. All adjustments made
to the interim financial statements were of a normal recurring nature.

The following summarizes the significant accounting policies of the Company:

a)   Basis of Presentation
The consolidated financial statements include the accounts of the Company and
the Bank. All significant intercompany balances and transactions are eliminated
in consolidation.

b)   Securities
The Company classifies its debt securities as either available-for-sale or
held-to-maturity. Equity securities are classified as available-for-sale.
Held-to-maturity securities are those debt securities that the Company has the
ability and intent to hold until maturity. All other securities not included as
held-to-maturity are classified as available-for-sale.

Available-for-sale securities are recorded at fair value. Held-to-maturity
securities are recorded at amortized cost, adjusted for the amortization or
accretion of premiums or discounts. Unrealized gains and losses, net of the
related tax effect, on available-for-sale securities are excluded from earnings
and are reported as a separate component of stockholders' equity until realized.
Transfers of securities between categories are recorded at fair value at the
date of transfer. Unrealized gains or losses associated with transfers of
securities from held-to-maturity to available-for-sale are recorded as a
separate component of stockholders' equity. The unrealized gains or losses
included in the separate component of equity for securities transferred from
available-for-sale to held-for-maturity are maintained and amortized into
earnings over the remaining life of the security as an adjustment to yield in a
manner consistent with the amortization or accretion of premium or discount on
the associated security.

A decline in the fair value of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.

Premiums and discounts are amortized or accreted over the life of the related
security as an adjustment of yield using the effective interest method. Interest
income is recognized when earned. Purchases and sales are recorded on a trade
date basis with settlement occurring shortly thereafter. Realized gains and
losses on securities sold are derived using the specific identification method
for determining the cost of securities sold.


                                       7
<PAGE>   8


1.   Summary of Significant Accounting Policies, cont.

c)   Loans
Loans are reported at the principal amount outstanding, net of deferred fees and
costs. Accrual of interest on a loan, including impaired loans, is discontinued
when management believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition precludes accrual.
Generally, interest income is not recognized on loans which are delinquent over
90 days, and income is subsequently recognized only to the extent that cash
payments are received until, in management's judgment, the borrower's ability to
make periodic interest and principal payments is back to normal, in which case
the loan is returned to accrual status.

Net loan fees and costs are deferred as an adjustment of loan principal and
amortized over the life of the related loan as an adjustment of yield using the
interest method.

The Bank originates some mortgage loans with the intent to sell. These loans are
carried at the lower of aggregate cost or fair value. Gains or losses on sales
of mortgages are recorded equal to the difference between sales proceeds and the
carrying value of the loans. The Bank typically retains the servicing rights to
mortgages sold.

d)   Allowance for Loan Losses
The allowance for loan losses consists of the provision charged to operations
based upon past loan loss experience, management's evaluation of the loan
portfolio under current economic conditions and such other factors that require
current recognition in estimating loan losses. Loan losses and recoveries of
loans previously written-off are charged or credited to the allowance as
incurred or realized, respectively.

Management believes that the allowance for loan losses is adequate. Management
uses presently available information to recognize losses on loans; however,
future additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for loan
losses and may require the Company to recognize additions to the allowance based
on their judgment of information available to them at the time of their
examination.

The Company estimates losses on impaired loans based on the present value of
expected future cash flows (discounted at the loan's effective interest rate) or
the fair value of the underlying collateral if the loan is collateral dependent.
An impairment loss exists if the recorded investment in a loan exceeds the value
of the loan as measured by the aforementioned methods. A loan is considered
impaired when it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement. Generally,
all commercial mortgage loans and commercial loans in a delinquent payment
status (90 days or more delinquent) are considered impaired. Residential
mortgage loans, consumer loans, home equity lines of credit and education loans
are evaluated collectively since they are homogenous and generally carry smaller
individual balances. Impairment losses are included as a component of the
allowance for loan losses. The Company recognizes interest income on impaired
loans using the cash basis of income recognition. Cash receipts on impaired
loans are generally applied according to the terms of the loan agreement, or as
a reduction of principal, based upon management judgment and the related factors
discussed above.

The Company estimates losses on impaired loans based on the present value of
expected future cash flows (discounted at the loan's effective interest rate) or
the fair value of the underlying collateral if the loan is collateral dependent.
An impairment loss exists if the recorded investment in a loan exceeds the value
of the loan as measured by the aforementioned methods. A loan is considered
impaired when it is probable that the Company will be unable to collect all
amounts due according to the contractual terms of the loan agreement. Generally,
all commercial mortgage loans and commercial loans in a delinquent payment
status (90 days or more delinquent) are considered impaired. Residential
mortgage loans, consumer loans, home equity lines of credit and education loans
are evaluated collectively since they are homogenous and generally carry smaller
individual balances. Impairment losses are included as a component of the
allowance for loan losses. Troubled debt restructurings involving a modification
of terms are recorded at fair value as of the date of the transaction. The
Company recognizes interest income on impaired loans using the cash basis of
income recognition. Cash receipts on impaired loans are generally applied
according to the terms of the loan agreement, or as a reduction of principal,
based upon management judgment and the related factors discussed above.


                                       8
<PAGE>   9


1.   Summary of Significant Accounting Policies, cont.

e)   Per Common Share Data
On December 31, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." The
statement supersedes Accounting Principles Board Opinion No. 15, "Earnings Per
Share," and specifies the computation, presentation, and disclosure requirements
for earnings per share (EPS) for entities with publicly held common stock. It
requires dual presentation of "Basic EPS" and "Diluted EPS" on the face of the
income statement for all entities with complex capital structures. All prior
period EPS data has been restated to conform to the provisions of this
statement.

Basic earnings per share is calculated by dividing net income available to
common shareholders by the weighted average number of shares outstanding during
the year. Diluted earnings per share includes the maximum dilutive effect of
stock issuable upon conversion of stock options and warrants.

In October, 1997, the Company declared a three-for-two stock split, effected by
means of a stock dividend paid November 28, 1997. All share and per share data
included in the consolidated financial statements and in the related notes
thereto have been retroactively adjusted to reflect the stock split.

The following table presents a reconciliation of the numerator and denominator
of the earnings per share computations (in thousands except share and per-share
amounts):
<TABLE>
<CAPTION>
                                                                        Quarter ended March 31, 1998
                                                             ----------------------------------------------------
                                                                 Income            Shares          Per-share
                                                               (Numerator)     (Denominator)         Amount
                                                             ---------------- ----------------- -----------------
Basic earnings per share:
<S>                                                               <C>                <C>             <C>  
Net income                                                        $ 347              1,438,344       $ .24

Effect of assumed exercise of stock options and warrants              0                 58,001

Diluted earnings per share:
Income available to common shareholders
                                                             ---------------- ----------------- -----------------
and assumed exercise of stock options and warrants                $ 347              1,496,345       $ .23
                                                             ================ ================= =================
</TABLE>

<TABLE>
<CAPTION>
                                                                        Quarter ended March 31, 1997
                                                             ----------------------------------------------------
                                                                 Income            Shares          Per-share
                                                               (Numerator)     (Denominator)         Amount
                                                             ---------------- ----------------- -----------------
<S>                                                               <C>                <C>             <C>  
Basic earnings per share:
Net income                                                        $ 402              1,424,792       $ .28

Effect of assumed exercise of stock options                           0                34,554

Diluted earnings per share:
Income available to common shareholders
                                                             ---------------- ----------------- -----------------
and assumed exercise of stock options                             $ 402              1,459,346       $ .28
                                                             ================ ================= =================
</TABLE>

f)   Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash,
amounts due from banks and federal funds sold.

g)   Reclassifications
Certain reclassifications have been made to prior period amounts for consistency
in reporting.

h)   New Accounting Pronouncements
Effective January 1, 1998, the Company adopted the remaining provisions of
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
which relate to the accounting for securities lending, repurchase agreements,
and other secured financing activities. These provisions, which were delayed for
implementation by SFAS No. 127, are not expected to have a material impact on
the Company. In addition, the FASB is considering certain amendments and
interpretations of SFAS No. 125 which, if enacted in the future, could affect
the accounting for transactions within their scope.


                                       9

<PAGE>   10



On January 1, 1998, the Company adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income." This statement establishes standards for
reporting and display of comprehensive income and its components. Comprehensive
income includes the reported net income of a company adjusted for items that are
currently accounted for as direct entries to equity, such as the mark to market
adjustment on securities available for sale, foreign currency items and minimum
pension liability adjustments. At the Company, comprehensive income represents
net income plus other comprehensive income, which consists of the net change in
unrealized gains or losses on securities available for sale for the period.
Accumulated other comprehensive income represents the net unrealized gains or
losses on securities available for sale as of the balance sheet dates.
Comprehensive income for the three-month periods ended March 31, 1998 and 1997
was $350,000 and $395,000, respectively. The components of comprehensive income
for the quarters ended March 31 are as follows:
<TABLE>
<CAPTION>
                                                                 1998                 1997
                                                                 ----                 ----
<S>                                                               <C>                  <C>
Net income                                                        347                402

Other comprehensive income:
  Unrealized holding gain (loss) 
   on securities, before tax                                       5                  (9)
  Income tax (expense) benefit                                    (2)                  2
-------------------------------------------------------------------------------------------
 Other comprehensive income, net of tax                            3                  (7)
-------------------------------------------------------------------------------------------
Comprehensive Income                                            $ 350                395
-------------------------------------------------------------------------------------------
</TABLE>

In June 1997, the FASB also issued Statement No. 131 entitled "Disclosures about
Segments of an Enterprise and Related Information." The statement requires
publicly-held companies to report financial and other information about key
revenue-producing segments of the entity for which such information is available
and is utilized by the chief operating decision maker. Specific information to
be reported for individual segments includes profit or loss, certain revenue and
expense items and total assets. A reconciliation of segment financial
information to amounts reported in the financial statements would be provided.
Statement 131 is effective for financial statements for periods beginning after
December 15, 1997. The new standard is not expected to result in significant
changes in the Company's reporting.



                                       10
<PAGE>   11


         Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION &
                 -------------------------------------------------------------
                 RESULTS OF OPERATIONS
                 ---------------------

GENERAL
-------

Skaneateles Bancorp, Inc. (the "Company") is a bank holding company, with
Skaneateles Savings Bank (the "Bank") being its sole subsidiary. The financial
condition and operating results of the Company are largely dependent on the
Bank, its primary investment.

Certain statements in this discussion are forward-looking. These may be
identified by the use of forward-looking words or phrases, such as "believe,"
"expect," "anticipate," "should," "planned," "estimated," and "potential." These
forward-looking statements are based on the Company's current expectations. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
such statements. To comply with the terms of the safe harbor, the Company notes
that a variety of factors could cause actual results and experience to differ
materially from the anticipated results or other expectations expressed in such
forward-looking statements. Among the risks and uncertainties that may affect
the operations, performance and results of the business of the Company and the
Bank are prevailing market rates of interest for both loans and deposits, loan
prepayments by, and the financial health of, the Bank's borrowers, general
economic conditions in the Bank's designated lending area, and competition from
banks and other financial institutions with greater resources operating in the
Bank's marketplace

                                 YEAR 2000 ISSUE

The Year 2000 issue stems from date coding practices in both software and
hardware. Specifically, hardware and software developers have often used
two-digit numbers rather than four-digit numbers to represent years. This was
done in a conscious effort to provide cost-effective and efficient business
solutions, given resource constraints and requirements in the past.
Consequently, when the year turns to 2000, the software may calculate the date
as 1900 because the century has not been defined.

Management has initiated an enterprise-wide program to prepare the Company's
computer systems and applications for the year 2000. The Company expects to
incur internal staffing costs as well as consulting and other expenses related
to infrastructure and facilities enhancements necessary to prepare the systems
for the year 2000. The Company is expending significant resources to assure that
its computer systems are reprogrammed in time to effectively deal with
transactions in the year 2000 and beyond.

The Company reported in its 1997 Annual Report to Stockholders that it expected
to spend as much as $900,000 in order to get the Bank's systems ready for
processing in the year 2000. That estimate was based on management's assumption
that the Bank's core data processing system would need to be replaced. It now
appears, based on statements and representations made by the vendor, that the
Bank's existing system can be remediated such that it will be able to process
transactions properly in the year 2000. Testing of the remediated software is
scheduled for the third quarter of 1998. If successful, the Company's estimated
expense associated with the entire Year 2000 project is now reduced to
approximately 956646917$400,000. Included in this amount is approximately
956646918$280,000 that has already been expended to date, $180,000 of which was
to purchase new computer equipment. If the Bank's testing reveals the software
is in fact not Year 2000 ready, the Company's Year 2000 costs will likely rise
to the original $900,000 estimate.

The Year 2000 problem creates risk for the Company from both unforeseen problems
in its own computer systems and from problems in the computer systems of third
parties with whom the Company deals on financial transactions. Failures of the
Company's and/or third parties' computer systems could have a material adverse
impact on the Company's ability to conduct its business.

The Company expects its Year 2000 date conversion project to be completed on a
timely basis. However, there can be no assurance that the systems of other
companies on which the Company's systems rely also will be timely converted or
that any such failure to convert by another company would not have an adverse
effect on the Company's systems.


                                       11
<PAGE>   12


                       Changes in Financial Condition from
                       -----------------------------------
                       December 31, 1997 to March 31, 1998
                       -----------------------------------

ASSETS
------

Consolidated assets of the Company were $257.6 million at March 31, 1998, a $1.5
million or .6% increase from December 31, 1997.

LOANS
----- 

Gross loans were $214.2 million at March 31, 1998, a decrease of $371,000 from
December 31, 1997. Residential mortgages outstanding decreased $3.9 million in
the first quarter, while commercial loans and mortgages increased $2.7 million
and consumer loans increased $868,000.

Total loan closings (including undisbursed funds) were $16.1 million in the
first quarter, compared with $10.8 million in the year ago quarter, an
increase of 48.7%. Commercial loan originations increased 94.1%, to $8 million
in the first quarter of 1998 compared with the year ago quarter. Residential
mortgage originations increased $1.9 million or 71%, due in part to an increase
in refinancings. Consumer loan originations decreased $448,000 or 10.9% to $3.7
million in the first quarter.

Total loans outstanding were down slightly from year-end due to an increase in
prepayments and refinances of residential mortgages, which exceeded $5 million
during the quarter, and to the sale of fixed rate mortgages. Fixed rate
residential mortgage originations totaled $4 million in the first quarter. The
Company generally sells fixed rate mortgages on the secondary market when rates
are low to control its interest rate risk. The Bank in most cases retains the
servicing on sold loans.

The increase in commercial loan activity is a direct result of the Bank's
efforts to expand its commercial portfolio. The Bank sees its market niche for
commercial loans as being small to mid sized businesses in central New York,
including corporations, partnerships and sole proprietorships, and has been
actively focusing its sales efforts to this piece of the market.

The decrease in consumer lending compared with the year ago quarter is a matter
of timing and does not reflect a trend. The Bank's direct marketing and
cross-selling program and its indirect lending program continue to yield
positive results. At March 31, 1998 the pipeline of consumer loan applications
in process was $2.6 million, compared with $1.1 million at March 31, 1997.

The results of the first quarter are indicative of what may occur throughout
1998 if interest rates remain low. The increase in mortgage prepayments and
refinancings, coupled with the overwhelming demand for fixed rate mortgages over
adjustable rates, is likely to continue absent an increase in rates. As a
result, the accelerated runoff in the Bank's residential mortgage portfolio will
hamper overall portfolio growth.

The following table sets forth the composition of Skaneateles' loan portfolio by
loan type as of the dates indicated.

<TABLE>
<CAPTION>
                                               March 31,                                December 31,
                              ----------------------------- --------------------- -------------------- ----------------------
                                          1998                     1997                   1997                  1996
                              ----------------------------- --------------------- -------------------- ----------------------
                                      Amount          %      Amount         %      Amount        %       Amount          %
                              ----------------------------- --------------------- -------------------- ----------------------
                                                             (Dollars in Thousands)
<S>                                 <C>            <C>      <C>          <C>      <C>          <C>      <C>          <C>   
Loans secured by first mortgages
   on real estate:
   Residential                      $115,402       53.88%   127,956      57.11%   119,350      55.63%   129,651      67.80%
   Commercial                         33,697       15.73%    32,515      15.46%    33,962      15.83%    31,728      15.94%
Other loans:
   Commercial loans & leases          25,969       12.13%    18,460       9.89%    22,995      10.72%    18,861       6.20%
   Home equity and improvement        19,410        9.06%    18,244       9.34%    20,624       9.61%    17,599       8.50%
   Guaranteed student                  1,140        0.53%       921       0.45%     1,059       0.49%       882       0.50%
   Other consumer                     18,566        8.67%     9,103       7.75%    16,565       7.72%     7,924       1.06%
------------------------------------------------------------------------------------------------------------------------------
          Total                     $214,184      100.00%   207,199     100.00%   214,555     100.00%   206,645     100.00%
==============================================================================================================================
</TABLE>


The allowance for loan losses was $2.6 million at March 31, 1998. Loan loss
provisions of $100,000 in the first quarter of 1998 were partially offset by net
charge-offs totaling $71,000.


                                       12
<PAGE>   13


The following table sets forth the activity in the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>

                                       Three Months Ended
                                           March 31,              Year Ended December 31,
                                 -------------------------  --------------------------------
                                    1998         1997         1997       1996       1995
                                  ----------    ------      --------   --------    ---------
                                                                   (In Thousands)

<S>                               <C>           <C>         <C>         <C>         <C>  
Beginning Balance                 $ 2,560       2,114       2,114       2,667       3,040

Provision
                                      100         100         500         175         235

Charge-offs
-----------
     Residential mortgages            (16)          0         (92)        (74)          0
     Commercial mortgages               0        (188)       (237)       (168)       (569)
     Business                         (36)        (12)       (137)       (999)       (153)
     Other consumer                   (31)        (70)       (107)        (60)        (10)
-----------------------------------------------------------------------------------------------
                                      (83)       (270)       (573)     (1,301)       (732)
-----------------------------------------------------------------------------------------------

Recoveries
----------
     Residential mortgages              0           0           2           0           0
     Commercial mortgages               0           3           5           0           0
     Business                           5           6         496         118         118
     Other consumer                     7           6          16           8           6
-----------------------------------------------------------------------------------------------
                                       12          15         519         126         124
-----------------------------------------------------------------------------------------------
Net Charge-offs                       (71)       (255)        (54)     (1,175)       (608)
-----------------------------------------------------------------------------------------------

Allowance of Cicero Bank
at time of acquisition                  0           0           0         447           0
-----------------------------------------------------------------------------------------------
Ending Balance                    $ 2,589       1,959       2,560       2,114       2,667
================================================================================================
Ratio of net charge-offs
  to average loans outstanding       0.03%       0.12%       0.03%       0.62%       0.36%
-----------------------------------------------------------------------------------------------
</TABLE>




                                       13
<PAGE>   14


The following table sets forth information with respect to loans delinquent 90
days or more, nonaccrual loans, restructured loans, and real estate owned as of
the dates indicated.
<TABLE>
<CAPTION>
                                                                 March 31,               December 31,
                                                           -----------------------------------------------
                                                            1998        1997     1997      1996      1995
                                                           -------     ------   ------    ------    ------
                                                                          (In Thousands)
<S>                                                       <C>          <C>       <C>       <C>         <C>
Nonaccruing loans
     Residential real estate mortgages                    $  1,122     1,379     1,091     1,359       271
     Commercial (1)                                          2,926     1,401     2,573     1,626     1,757
     Consumer                                                  249       171       253       186       110
-----------------------------------------------------------------------------------------------------------
Total                                                     $  4,297     2,951     3,917     3,171     2,138
===========================================================================================================
Other loans past due 90 days or more and still accruing:
     Consumer (2)                                                0        42         0        29         1
     Commercial (1)                                              0       266         0       370         0
-----------------------------------------------------------------------------------------------------------
Total                                                       $    0       308         0       399         1
===========================================================================================================
Restructured loans, not included above                           0         0         0         0     1,125
===========================================================================================================
Real estate owned, net                                         892       717       951       717       397
===========================================================================================================
Total assets containing specific risk elements              $5,189     3,976     4,868     4,287     3,661
===========================================================================================================
Ratio of total loans past due
90 days or more to gross loans                                2.01%     1.57%     1.83%     1.73%     1.25%
===========================================================================================================
Ratio of assets containing specific
risk elements to total assets                                 2.01%     1.65%     1.90%     1.77%     1.74%
===========================================================================================================
</TABLE>

(1) Includes commercial real estate loans 
(2) Consists primarily of Guaranteed Student
Loans 

Nonperforming assets (nonaccrual loans and real estate owned) totaled $5.2
million, or 2.0% of total assets at March 31, 1998, compared with $4.9 million,
or 1.9% of total assets at December 31, 1997, and $3.7 million, or 1.5% at March
31, 1997. Included in nonperforming assets at March 31, 1998 were nonaccrual
loans of $4.3 million or 2.0% of gross loans, compared with $3.9 million or 1.8%
at December 31, 1997 and $3.0 million or 1.4% at March 31, 1997.

At March 31, 1998, nonaccrual loans were comprised of 26% residential mortgages,
68% commercial loans and mortgages and 6% consumer loans. Approximately $1.7
million of the commercial nonaccrual loans are secured by real estate, and
another $261,000 in commercial nonaccrual loans are guaranteed 75% by the Small
Business Administration.

The allowance for loan losses covered 60% of nonaccrual loans at March 31, 1998,
compared with coverage of 65% at December 31, 1997 and 66% at March 31, 1997.

Impaired loans, which included troubled debt restructured loans, were
$2.4 million and $839,000 at March 31, 1998 and 1997, respectively. Included in
these amounts are $1.5 million and $443,000 of impaired loans for which the
related allowance for loan losses is $357,000 and $83,000, respectively. In
addition, included in the total impaired loans at March 31, 1998 and 1997 are
$927,000 and $396,000, respectively, of impaired loans for which no allowance is
recorded due to the adequacy of collateral values in accordance with SFAS 114.
The average recorded investment in impaired loans during the first quarter of
1998 and 1997 was approximately $2.2 million and $1.1 million, respectively.

                                       14
<PAGE>   15


The amount of interest income recognized on impaired loans for the three months
ended March 31, 1998 was approximately $4,000. The Company did not recognize any
interest income on impaired loans in the first quarter of 1997. The Bank is not
committed to lend additional funds to these borrowers.

Potential problem loans at March 31, 1998 amounted to $994,000. "Potential
problem loans" are defined as loans which are not included with past due and
non-accrual loans discussed above, but about which management, through normal
internal credit review procedures, has information about possible credit
problems which may result in the borrower's inability to comply with the present
loan repayment terms. There have been no loans classified for regulatory
purposes as loss, doubtful, or substandard that are not included above or which
caused management to have serious doubts as to the ability of the borrower to
comply with repayment terms. In addition, there were no material commitments to
lend additional funds to borrowers whose loans were classified as
non-performing.

DEPOSITS
--------

Total deposits (including advance payments by borrowers for property taxes and
insurance) were $219.4 million at March 31, 1998, compared with $218 million at
December 31, 1997 and $204.7 million at March 31, 1997.

The Bank's deposit strategy has focused on growing its low cost transaction
account base (savings, checking and NOW accounts), while reducing its reliance
on time certificates. An ongoing direct mail marketing program that was
implemented in February 1996 supports this strategy. Transaction accounts
(including escrow) comprised 41.1% of total deposits at March 31, 1998, up from
40.1% at December 31, 1997 and 38.1% at March 31, 1997. The direct mail program
is an integral part of the Bank's plan to increase its lower costing
transaction account base and reduce its dependence on higher costing time
deposits. In addition to reducing the Bank's cost of funds, transaction accounts
provide a more stable funding source than time accounts and the Bank earns
service fee income on most transaction accounts.

The following table sets forth deposits by type of account as of the dates
indicated.

<TABLE>
<CAPTION>
                                              March 31,                                 December 31,
                             -------------------------------------------- ------------------------------------------
                                     1998                   1997                  1997                 1996
                             ---------------------- --------------------- --------------------- --------------------
                                           Percent              Percent              Percent               Percent
                                          of total              of total             of total             of total
                             Amount       deposits   Amount    deposits    Amount    deposits   Amount    deposits
                             ---------------------- --------------------- --------------------- --------------------
                                                             (Dollars in Thousands)

<S>                          <C>            <C>      <C>         <C>      <C>         <C>      <C>         <C>   
Savings and club accounts    $ 43,890       20.00%   40,407      19.74%   42,451      19.47%   38,690      18.87%

Time certificates             104,390       47.58%  104,544      51.08%  105,072      48.19%  107,429      52.39%
Money market accounts          24,914       11.36%   22,115      10.80%   24,234      11.12%   21,991      10.73%

NOW accounts                   24,256       11.05%   21,354      10.43%   24,456      11.22%   20,314       9.91%

Demand accounts                20,897        9.52%   15,230       7.44%   20,236       9.28%   14,861       7.25%

Escrow accounts                 1,081        0.49%    1,043       0.51%    1,569       0.72%    1,744       0.85%

----------------------------- -------------------------------------------------------------------------------------
          Total             $219,428       100.00%  204,693     100.00%  218,018     100.00%  205,029     100.00%
--------------------------------------------------------------------------------------------------------------------
</TABLE>

STOCKHOLDERS' EQUITY
--------------------

Stockholders' equity at March 31, 1998 was $18.0 million, or $12.48 per share,
compared with $17.7 million or $12.31 per share at December 31, 1997 and $16.6
million or $11.61 at March 31, 1997. At March 31, 1998, the Bank's leverage
capital ratio was 6.78% and its risk-based capital ratio was 11.35%. Both
capital measurements were in excess of regulatory requirements.

In April 1998 the Company declared a dividend of $.07 per share payable on May
19, 1997 to shareholders of record on May 5.


                                       15
<PAGE>   16


                     COMPARISON OF THE RESULTS OF OPERATIONS
                     ---------------------------------------

GENERAL
-------

Net income was $347,000 or $.23 per diluted share for the first quarter of 1998,
compared with $402,000 or $.28 per diluted share for the same period in 1997. A
$266,000 increase in net interest income and a $49,000 increase in other
operating income was offset by an increase in other operating expenses of
$402,000.

NET INTEREST INCOME
-------------------

Net interest income is affected by the difference between the yield earned on
interest earning assets and rates paid on interest bearing deposits and
borrowings. The relative amounts of interest earning assets, interest bearing
deposits, and borrowings also impact net interest income levels.

The following table sets forth, for the three months ended March 31, information
regarding (i) the total dollar amount of interest income from interest-earning
assets and the resulting average yields; (ii) the total dollar amount of
interest expense on interest-bearing liabilities and the resultant average cost;
(iii) net interest income; (iv) interest rate spread; (v) net interest-earning
assets; (vi) net yield on interest-earning assets; and (vii) ratio of
interest-earning assets to interest-bearing liabilities. Nonaccruing loans,
which are immaterial, have been included in interest earning-assets. No tax
equivalent adjustments were made.
<TABLE>
<CAPTION>
                                                       1998                                     1997
                                        ------------------------------------     -----------------------------------
                                          Average                   Yield/        Average                   Yield/
                                          Balance    Interest        Rate         Balance    Interest        Rate
                                        ------------------------------------     -----------------------------------
                                                                  (Dollars In Thousands)
<S>                                       <C>             <C>         <C>           <C>           <C>         <C>  
Interest-earning assets:
  Mortgage loans                          $ 151,293       2,988       7.90%         160,538       3,227       8.04%
  Other loans                                63,260       1,493       9.57%          45,321       1,005       8.99%
--------------------------------------------------------------------------------------------------------------------
Total loans                                 214,553       4,481       8.39%         205,859       4,232       8.25%
--------------------------------------------------------------------------------------------------------------------
  Securities                                 17,500         279       6.47%          18,075         294       6.60%
  Federal funds sold                          9,043         124       5.56%           2,550          46       7.32%
--------------------------------------------------------------------------------------------------------------------
Total interest-earning assets               241,096       4,884       8.15%         226,484       4,572       8.11%
--------------------------------------------------------------------------------------------------------------------
Non-interest earning assets                  13,936           0                      13,421           0
--------------------------------------------------------------------------------------------------------------------
Total assets                              $ 255,032       4,884                     239,905       4,572
====================================================================================================================
Interest-bearing liabilities:
  Deposits:
     Savings and club accounts           $   42,798         303       2.87%          39,018         274       2.85%
     Time certificates                      104,944       1,431       5.53%         106,998       1,476       5.59%
     Money market accounts                   24,614         228       3.76%          21,382         180       3.41%
     Now and escrow accounts                 24,372         124       2.06%          21,146         110       2.11%
--------------------------------------------------------------------------------------------------------------------
  Total interest-bearing deposits           196,728       2,086       4.30%         188,544       2,040       4.39%
--------------------------------------------------------------------------------------------------------------------
  Borrowings                                 18,407         290       6.39%          18,062         290       6.51%
--------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities          215,135       2,376       4.48%         206,606       2,330       4.57%
Non-interest-bearing deposits                19,398           0                      15,190           0
Non-interest-bearing liabilities              2,501           0                       1,470           0
--------------------------------------------------------------------------------------------------------------------
Total liabilities                           237,034       2,376                     223,266       2,330
Stockholders' equity                         17,998           0                      16,639           0
--------------------------------------------------------------------------------------------------------------------
Total liabilities and
  stockholders' equity                    $ 255,032       2,376                     239,905       2,330
=====================================================================================================================
Net interest income/
  interest rate spread                                    2,508       3.67%                       2,242       3.54%
=====================================================================================================================
Net interest-earning assets/
  net yield on interest-earning
  assets                                 $   25,961                   4.16%          19,878                   3.96%
=====================================================================================================================
Ratio of interest-earning assets
  to interest-bearing liabilities                                     1.12                                    1.10
=====================================================================================================================
</TABLE>

Net interest income was $2.5 million for the three months ended March 31, 1998
compared with $2.2 million for the same period in 1997. The increase is
attributable to a $14.6 million increase in average earning assets combined with
a 20 basis point increase in the net interest margin.

                                       16
<PAGE>   17


Average loans outstanding in the first quarter were $214.6 million, compared
with $205.9 million in the year ago quarter. All of this growth was in the
Bank's consumer and commercial loan portfolios, which increased a combined $20.2
million.

The Company's earning-asset yield was 8.15% in the first quarter of 1998,
compared with 8.11% in the year ago quarter.

The average cost of interest-bearing liabilities decreased 9 basis points due
mainly to a change in the mix of interest bearing deposits, and to a lower cost
of time certificates. Savings and NOW accounts, which are the Company's lowest
costing source of funds, grew to 34.1% of average interest bearing deposits in
the first quarter of 1998, from 31.9% in the year ago quarter.

The net interest margin, which is equal to net interest income divided by
average interest-earning assets, was 4.16% for the first quarter of 1998, up
from 3.96% in the year ago quarter.

The goal of asset/liability management is to reduce the volatility of net
interest income during periods of changing market interest rates (interest rate
risk). The Company uses three methods to measure its interest rate risk: i) gap;
ii) income simulation; and iii) market value of equity analysis. Gap analysis
measures the difference between assets and liabilities which reprice and/or
mature within a given time frame, typically the cumulative one-year horizon. An
asset-sensitive gap position could lead to an increase in net interest income in
a rising rate environment, and a decrease in net interest income in a falling
rate environment, as assets reprice or mature quicker than liabilities.
Conversely, a liability-sensitive gap position could lead to a decrease in net
interest income in a rising rate environment and an increase in net interest
income in a falling rate environment. Income simulation measures the potential
impact on net interest income of hypothetical changes in interest rates. Market
value of equity analysis measures the potential impact on stockholders' equity
of hypothetical changes in interest rates.

In February 1996, the Bank purchased an interest rate floor with a notional
amount of $18 million, to hedge a portion of its prime-based loan portfolio.
Under the agreement, which expires in February 1999, the Bank will receive
payments on a quarterly basis if the prime rate drops below 8.25% (the "strike
rate"). Payments are equal to the amount by which the prime rate falls below the
strike rate multiplied by the notional amount of the floor. The fee paid for the
floor is included in other assets and is being amortized to interest income
using the interest method over the life of the floor.

The Company's cumulative one-year ratio of rate sensitive assets to rate
sensitive liabilities (one-year gap) was 1.05 at March 31, 1998.

OTHER OPERATING INCOME
----------------------

Total other operating income was $470,000 in the first quarter of 1998, an
increase of $49,000 or 11.6% from the first quarter of 1997. Gains on loan sales
decreased $42,000 or 84% as the first quarter of 1997 was benefited by an
infrequent sale of commercial loans. Service charges and other operating income
increased $91,000 or 24.5% due mainly to fee income generated by the growth in
the Company's checking and savings accounts.

OTHER OPERATING EXPENSES
------------------------

Total other operating expenses were $2.3 million for the quarter ended March 31,
1998, compared with $1.9 million for the same period in 1997. Costs relating to
the Company's Year 2000 project and other technology improvements added
approximately $100,000 of expense in the first quarter of 1998. Other increases
in operating expenses were due to higher customer transaction volume and the
costs of operating the North Medical branch, which opened in September 1997.


                                       17

<PAGE>   18


PART II.  OTHER INFORMATION
---------------------------

         ITEM 1.  Legal Proceedings
         -------  Not applicable

         ITEM 2.  Changes in Securities
         -------  Not applicable

         ITEM 3.  Defaults Upon Senior Securities
         -------  Not applicable

         ITEM 4.  Submission of Matters to a Vote of Security Holders a) The
         -------  annual meeting of stockholders was held April 21, 1998.

                  b)       The following four directors were elected: Walter D.
                           Copeland, John P. Driscoll, Carl W. Gerst, Jr., and
                           John Bernard Henry. The following directors have
                           continued their term of office: Israel Berkman, David
                           E. Blackwell, Ann G. Higbee, Howard J. Miller,
                           Raymond C. Traver, Jr., Anne E. O'Connor.

                  c)       The following table summarizes the votes cast for
                           each matter voted upon:
<TABLE>
<CAPTION>
                      1. Election of Directors.
                                                               For                Against/Withheld
                                                               ---                ----------------
<S>                                                         <C>                       <C>    
                        Walter D. Copeland                  1,077,049                 195,172
                        John P. Driscoll                    1,077,649                 194,572
                        Carl W. Gerst, Jr.                  1,077,489                 194,732
                        John Bernard Henry                  1,077,649                 194,572
<CAPTION>

                      2. Proposal to ratify the appointment by the Board of
                         Directors of KPMG Peat Marwick LLP as independent
                         auditors for the fiscal year ending December 31, 1998.

                                        For                  Against                  Abstain
                                        ---                  -------                  -------
<S>                                  <C>                     <C>                       <C>  
                                     1,169,378               99,831                    3,012

<CAPTION>
                      3. Proposal to amend the Company's certificate of
                         incorporation to increase the number of shares of
                         Common Stock, par value $.01 per share, which the
                         Corporation has authority to issue, from 2,500,000 to
                         4,000,000.

                                        For                  Against                  Abstain
                                        ---                  -------                  -------
<S>                                   <C>                    <C>                       <C>  
                                      971,329                277,277                   8,698

                      4. To ratify and approve the 1998 Stock Option Plan
<CAPTION>

                                        For                  Against           Abstain       Broker non-vote
                                        ---                  -------           -------       ---------------
<S>                                   <C>                    <C>               <C>               <C>    
                                      752,106                265,494           16,130            238,491

                      5. To ratify and approve the 1998 Non-Employee Director Warrant Plan
<CAPTION>

                                        For                  Against           Abstain       Broker non-vote
                                        ---                  -------           -------       ---------------
<S>                                   <C>                    <C>               <C>               <C>    
                                      702,883                313,294           17,853            238,191

</TABLE>

                                       18

<PAGE>   19


         ITEM 5.  Other Information
                  On April 14, 1998, the Company declared a cash dividend of
                  $.07 per share, payable on May 19, 1998 to shareholders of
                  record on May 5.

         ITEM 6.  Exhibits and Reports on Form 8-K
                  a. Exhibits

                      No.      Exhibit
                      ---      -------

                      3 (i)    Certificate of Amendment of Certificate of 
                               Incorporation of Skaneateles Bancorp, Inc.
                      3 (ii)   Restated Certificate of Incorporation of 
                               Skaneateles Bancorp, Inc.
                      27       Financial Data Schedule

                  b.  On January 30, the Company filed a Form 8-K announcing the
                      location and time of its Annual Meeting of stockholders.
                      No financial statements were filed as parts of this
                      report.





                                       19
<PAGE>   20


                                   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.

                            SKANEATELES BANCORP, INC.
                            -------------------------
                                  (Registrant)





By:  /s/ John P. Driscoll                                 Date: May 12, 1998
     --------------------------                                 ------------
        John P. Driscoll
        Chairman, President and Chief
        Executive Officer


By:  /s/ J. Daniel Mohr                                   Date: May 12, 1998
     --------------------------                                 ------------
        J. Daniel Mohr
        Chief Financial Officer
        and Treasurer


                                       20