<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 September 30, 1997
                                               ------------------

                         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 November 10, 1997
--------------------------------------------------------------------------------
Common Stock (par value $.01 per share)                  956,507 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                         10

PART II. OTHER INFORMATION

         ITEM 1.  Legal Proceedings                                          16

         ITEM 2.  Changes in Securities                                      16

         ITEM 3.  Defaults Upon Senior Securities                            16

         ITEM 4.  Submission of Matters to a Vote of Security Holders        16

         ITEM 5.  Other Information                                          16

         Item 6.  Exhibits and Reports on Form 8-K                           16


SIGNATURES                                                                   17


                                       2



<PAGE>   3




SKANEATELES BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                   SEPTEMBER 30,   DECEMBER 31,
ASSETS                                                      1997          1996
--------------------------------------------------------------------------------
                        (In Thousands, Except Share Data)
<S>                                                    <C>                <C>
Cash and due from banks                                $   6,516          5,726
Federal funds sold                                         1,400          3,800
Securities available for sale                              8,451          6,009
Securities held to maturity, fair value of
     $9,298 in 1997 and $11,138 in 1996                    9,041         10,893
Federal Home Loan Bank stock, at cost                      1,561          1,410
Mortgage loans receivable                                154,186        161,379
Other loans and leases receivable                         58,283         45,266
--------------------------------------------------------------------------------
                                                         212,469        206,645
          Net deferred costs                                 457            299
          Allowance for loan losses                       (2,085)        (2,114)
--------------------------------------------------------------------------------
          Loans receivable, net                          210,841        204,830
Premises and equipment, net                                6,186          6,195
Real estate owned, net                                       975            717
Accrued interest receivable                                1,401          1,271
Other assets                                               1,271          1,331
--------------------------------------------------------------------------------
                                                         247,643        242,182
================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Liabilities:
     Interest bearing deposits                         $ 190,845        188,424
     Demand deposits                                      17,311         14,861
--------------------------------------------------------------------------------
          Total deposits                                 208,156        203,285

     Advance payments by borrowers for property
          taxes and insurance                                650          1,744
     Borrowings                                           18,378         18,181
     Accrued expenses and other liabilities                3,122          2,742
--------------------------------------------------------------------------------
          Total liabilities                              230,306        225,952
--------------------------------------------------------------------------------

Stockholders' equity:
     Preferred stock, par value $.01 per share,
          authorized 500,000 shares, none issued              --             --
     Common stock, par value $.01 per share,
          authorized 2,500,000 shares, 955,067
          and 948,092 shares issued in 1997 and
          1996, respectively                                  10              9
     Additional paid-in capital                            9,076          8,978
     Retained earnings                                     8,293          7,300
     Net unrealized loss on securities,
          net of taxes                                       (42)           (57)
--------------------------------------------------------------------------------
            Total stockholders' equity                    17,337         16,230
--------------------------------------------------------------------------------
                                                       $ 247,643        242,182
================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       3



<PAGE>   4




SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED     NINE MONTHS ENDED
                                                       SEPTEMBER 30,         SEPTEMBER 30,
                                                     1997       1996       1997       1996
------------------------------------------------------------------------------------------
                                                     (In Thousands, Except Per Share Data)
<S>                                              <C>           <C>        <C>        <C>
Interest income:
     Mortgage loans                              $  3,166      3,140      9,597      8,934
     Other loans                                    1,311      1,011      3,478      2,342
     Securities                                       312        382        909      1,104
     Federal funds sold                                64         19        151        188
------------------------------------------------------------------------------------------
          Total interest income                     4,853      4,552     14,135     12,568
------------------------------------------------------------------------------------------

Interest expense:
     Deposits                                       2,080      2,116      6,152      5,980
     Borrowings                                       301        251        889        730
------------------------------------------------------------------------------------------
          Total interest expense                    2,381      2,367      7,041      6,710
------------------------------------------------------------------------------------------
          Net interest income                       2,472      2,185      7,094      5,858
Provision for loan losses                             200         50        400        100
------------------------------------------------------------------------------------------
          Net interest income after provision
               for loan losses                      2,272      2,135      6,694      5,758
------------------------------------------------------------------------------------------

Other operating income:
     Net gain on security transactions                 --         --         --         77
     Net gain on sale of loans                          8          6         73         23
     Service charges                                  374        187        998        453
     Other                                             83         84        264        204
------------------------------------------------------------------------------------------
          Total other operating income                465        277      1,335        757
------------------------------------------------------------------------------------------
                                                    2,737      2,412      8,029      6,515
------------------------------------------------------------------------------------------
Other operating expenses:
     Salaries and employee benefits                   874        951      2,699      2,360
     Building, occupancy and equipment                321        323        933        897
     Real estate owned, net                            21          2         36          2
     Other                                            860        706      2,382      2,131
------------------------------------------------------------------------------------------
          Total other operating expenses            2,076      1,982      6,050      5,390
------------------------------------------------------------------------------------------

          Income before income taxes                  661        430      1,979      1,125
Income tax                                            231         25        700         65
==========================================================================================
          Net income                             $    430        405      1,279      1,060
==========================================================================================
Net income per common share                      $   0.45       0.43       1.34       1.13
==========================================================================================
Weighted average common shares                    954,818    945,497    952,896    940,195
==========================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4



<PAGE>   5




SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         NET
                                                      ADDITIONAL                     UNREALIZED
                                           COMMON      PAID-IN-         RETAINED   GAIN (LOSS) ON   TREASURY
                                           STOCK        CAPITAL         EARNINGS      SECURITIES       STOCK           TOTAL
------------------------------------------------------------------------------------------------------------------------------
                                                                           (In Thousands)
------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>          <C>             <C>              <C>          <C>             <C>
Balance at December 31, 1995                $10          9,526           6,083            33           (713)           14,939

Net income                                   --             --           1,060            --             --             1,060

Sale of 12,100 shares under option           --            102              --            --             --               102

Issuance of 2,678 shares of stock
     under 1995 Non-employee
     Director's Stock Plan                   --             37              --            --             --                37

Cash dividend declared on
     Common stock ($.18 per share)           --             --            (170)           --             --              (170)

Change in net unrealized
     gain on securities, net of
     tax effect of $68                       --             --              --           (96)            --               (96)
------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1996               $10          9,665           6,973           (63)          (713)           15,872
==============================================================================================================================

------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996                $ 9          8,978           7,300           (57)            --            16,230

Net income                                   --             --           1,279            --             --             1,279

Sale of 3,300 shares under option             1             28              --            --             --                29

Issuance of 1,925 shares of stock
     under 1995 Non-employee
     Director's Stock Plan                   --             36              --            --             --                36

Issuance of 1,467 shares of
     stock under Dividend
     Reinvestment Plan                       --             27              --            --             --                27

Issuance of 283 shares of stock
     under 1997 Employee Stock
     Purchase Plan                           --              7              --            --             --                 7

Cash dividend declared on
     Common stock ($.30 per share)           --             --            (286)           --             --              (286)

Change in net unrealized
     loss on securities,
     net of tax effect of $5                 --             --              --            15             --                15
==============================================================================================================================
Balance at September 30, 1997               $10          9,076           8,293           (42)            --            17,337
==============================================================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5



<PAGE>   6



SKANEATELES BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
                                                     NINE MONTHS ENDED SEPTEMBER 30,
                                                     -------------------------------
                                                            1997         1996
--------------------------------------------------------------------------------
                                                              (In Thousands)
<S>                                                        <C>         <C>
OPERATING ACTIVITIES
Net Income                                                 $ 1,279     $  1,060
Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities
          Provision for loan losses                            400          100
          Depreciation and amortization                        561          434
          Mortgage loans originated for sale                (2,686)      (3,210)
          Proceeds from sale of loans
               originated for sale                           3,368        3,345
          Net gain on security transactions                     --          (77)
          Net increase in interest receivable                 (130)        (173)
          Net increase (decrease)
               in other liabilities                            368        2,345
          Other, net                                          (300)         170
--------------------------------------------------------------------------------
                    Total adjustments                        1,581        2,934
--------------------------------------------------------------------------------
                    Net cash provided by
                         operating activities                2,860        3,994
INVESTING ACTIVITIES
     Proceeds from maturities of securities
          available for sale                                 1,008        1,000
     Proceeds from sale of securities
          available for sale                                    --        2,462
     Proceeds from maturities of securities
          held to maturity                                   1,445        3,150
     Purchase of securities held to maturity                   (60)      (4,135)
     Purchase of securities available for sale              (3,825)      (3,096)
     Principal collected on asset-backed securities            820          890
     Purchase of Federal Home Loan Bank stock                 (151)        (107)
     Net increase in loans made to customers                (7,167)     (19,670)
     Net cash and cash equivalents from acquired bank           --        3,387
     Proceeds from sale of real estate owned                   135          196
     Purchase of property and equipment, net                  (462)        (293)
--------------------------------------------------------------------------------
          Net cash used in investing activities             (8,257)     (16,216)
FINANCING ACTIVITIES:
     Net decrease in time certificates                      (4,088)      (1,091)
     Net increase in other deposits                          7,865        7,145
     Increase (decrease) in overnight borrowings               (25)       2,930
     Increase in long-term borrowings                          500           --
     Repayment of long-term borrowings                        (278)         (45)
     Proceeds from issuance of stock pursuant
          to stock plans                                        98          139
     Dividends paid                                           (286)        (170)
--------------------------------------------------------------------------------
          Net cash provided by financing activities          3,786        8,908
--------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents        (1,611)      (3,314)
Cash and cash equivalents at beginning of period             9,526        9,289
================================================================================
Cash and cash equivalents at end of period                 $ 7,915     $  5,975
================================================================================
Interest paid                                              $ 7,064     $  6,724
================================================================================
Income taxes paid                                          $   756     $     89
================================================================================
Supplemental schedule of noncash investing activities:
          Mortgage loans foreclosed and
               transferred to real estate owned            $   408     $    271
================================================================================
</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, 1996 was derived
from the Company's 1996 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 1996 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.


                                       7



<PAGE>   8




1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONT.

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.

C) LOANS RECEIVABLE

Loans receivable are reported at the principal amount outstanding, net of
deferred fees and an allowance for loan losses. Accrual of interest is
discontinued on a loan 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 capitalized 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. 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.

E) PER COMMON SHARE DATA

Per common share data is computed based upon the weighted average number of
shares outstanding. Common stock equivalents are not included since dilution is
less than 3%.


                                       8



<PAGE>   9




1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONT.

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, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities." The statement provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are secured
borrowings. The impact on the Company's consolidated financial statements is not
expected to be material.

The Financial Accounting Standards Board (FASB) issued Statement No. 128 ("SFAS
No. 128") Earnings Per Share in February 1997 effective for periods ending after
December 15, 1997. Statement 128 was issued to simplify the computation of EPS
and to make the U.S. standard more compatible with the EPS standards of other
countries. Prior period EPS will be restated after the effective date of this
statement. The adoption of SFAS No. 128 is not expected to have material effect 
on earnings per share as the Company does not have a complex capital structure.

In June 1997, the FASB issued Statement No. 130 entitled "Reporting
Comprehensive Income." The statement establishes standards for the reporting and
display of comprehensive income and its components (revenues, expenses, gains
and losses) in a full set of general purpose financial statements. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events and circumstances from nonowner
sources. The impact of adopting Statement 130, which is effective for fiscal
years beginning after December 15, 1997, is not expected to have a material 
impact on the Company.

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. At the present time, the effect of adopting the statement, 
if any, has not been determined.

2. INCOME TAXES

Income taxes for the third quarter were $231,000 or 35.0% of pre-tax income,
compared with $25,000 or 5.8% of pre-tax income for the year ago quarter. In
1995, the Company had a valuation allowance relating to loan losses that had not
yet been deducted for income tax purposes. The Company generated sufficient
earnings in 1994 through 1996 to enable it to reduce the valuation allowance,
resulting in an effective tax rate less than the statutory rates for 1996. The
Company's effective tax rate is projected to be approximately 35% in 1997.


                                       9



<PAGE>   10




                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.

                       CHANGES IN FINANCIAL CONDITION FROM
                       -----------------------------------
                     DECEMBER 31, 1996 TO SEPTEMBER 30, 1997
                     ----------------------------------------

ASSETS

Consolidated assets of the Company were $247.6 million at September 30, 1997, a
$5.5 million or 2.3% increase from December 31, 1996.

LOANS

Net loans receivable were $210.8 million at September 30, 1997, an increase of
$6 million or 2.9% from December 31, 1996. Total loan closings (including
undisbursed funds) were $12.2 million in the third quarter, compared with $15.7
million in the year ago quarter, a decrease of 22%. Consumer installment and
commercial loan originations during the quarter increased a combined $3.1
million or 44.7% over the year ago quarter, while residential mortgage
originations decreased $6.5 million or 72.8% compared with the same period last
year. Consumer and commercial loans represented 80.2% of the total loans
originated in the third quarter of 1997, compared with 43.3% in the third
quarter of 1996.

As discussed in the Company's 1996 Form 10-K Annual Report, a large portion of
the residential mortgages originated in 1996 was referred to the Bank by
third-party brokers in areas contiguous to the Bank's designated lending area.
Brokers were used to supplement the Bank's own direct originations in order to
meet mortgage lending goals. Increasing competition in mortgage lending,
however, has squeezed margins and profitability. As a result, the Bank shifted
its lending focus in 1996, placing more emphasis on consumer and commercial
loans and less on residential mortgages.

In the third quarter of 1996, the Bank effectively suspended the use of mortgage
brokers, focusing instead on its designated lending area for residential
mortgages, and implemented an indirect lending program, through which it
receives consumer loan applications from Bank-approved automobile, boat and
recreational vehicle dealerships on behalf of their customers to finance their
purchases. This program is expected to be an integral part of the Bank's
consumer loan origination efforts for the foreseeable future. These applications
are subject to the Bank's normal consumer loan underwriting criteria. Indirect
consumer loan originations in the first nine months of 1997 totaled
approximately $6.2 million or 37.7% of total consumer loan originations.

The Bank's deposit base has grown considerably in 1996 and 1997, with more than
11,000 new deposit accounts being added since March 1996, as a result of a
direct mail marketing program. This has provided the Bank with an enormous
opportunity to cross-sell the Bank's credit products, and is expected to be a
significant source of future consumer loan growth.

The increase in commercial loan activity is a direct result of the Bank's
efforts to expand its presence in this part of the local market. 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.
In addition, the Bank has attempted to increase its name recognition in the
business community via advertisements in trade journals and business
publications and participation in trade shows.

In January 1997, the Bank expanded its commercial loan products by offering
dealer floor plans. Through this program the Bank offers revolving credit lines
to local automobile, boat and recreational vehicle dealerships to finance
inventory purchases. As of September 30, 1997, the Bank had total approved
dealer floor plan lines totaling $3.7 million.


                                       10



<PAGE>   11




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

<TABLE>
<CAPTION>
                                                   SEPTEMBER 30,                                 DECEMBER 31,
                                    ------------------------------------------     -----------------------------------------
                                            1997                   1996                   1996                   1995
                                    -------------------     ------------------     ------------------     ------------------
                                     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               $121,337     57.11%     129,644     63.49%     129,651     62.74%     116,320     67.80%
          Commercial                  32,849     15.46%      30,898     15.13%      31,728     15.35%      27,357     15.94%
Other loans:
     Commercial loans & leases        21,008      9.89%      19,227      9.42%      18,861      9.13%      10,631      6.20%
     Home equity and
          improvement                 19,844      9.34%      15,995      7.83%      17,599      8.52%      14,578      8.50%
     Guaranteed student                  955      0.45%         763      0.37%         882      0.43%         858      0.50%

     Other consumer                   16,476      7.75%       7,678      3.76%       7,924      3.83%       1,821      1.06%
----------------------------------------------------------------------------------------------------------------------------
          Total                     $212,469    100.00%     204,205    100.00%     206,645    100.00%     171,565    100.00%
============================================================================================================================
</TABLE>

The allowance for loan losses was $2,085,000 at September 30, 1997. Loan loss
provisions of $400,000 in the first nine months of 1997 were offset by net
charge-offs totaling $429,000.

In October and November 1997, the Bank received cash payments of $438,000 on two
loans that had been charged down in 1995 and 1996. These recoveries were
credited to the allowance for loan losses.

The following table sets forth the activity in the allowance for loan losses for
the periods indicated:

<TABLE>
<CAPTION>
                                       NINE MONTHS ENDED
                                         SEPTEMBER 30,                YEAR ENDED DECEMBER 31,
                                     ---------------------      ---------------------------------
                                       1997          1996        1996          1995         1994
                                     --------       ------      -------       ------       ------
                                                                   (In Thousands)
<S>                                  <C>            <C>          <C>          <C>          <C>
Beginning Balance                    $ 2,114        2,667        2,667        3,040        2,938

Provision                                400          100          175          235          360

CHARGE-OFFS
     Residential mortgages               (66)         (35)         (74)          --          (18)
     Commercial mortgages               (237)        (168)        (168)        (569)          --
     Business                            (76)        (939)        (999)        (153)        (331)
     Other consumer                     (115)         (14)         (60)         (10)         (17)
-------------------------------------------------------------------------------------------------
                                        (494)      (1,156)      (1,301)        (732)        (366)
-------------------------------------------------------------------------------------------------

RECOVERIES
     Commercial mortgages                  5           --           --           --           --
     Business                             46           49          118          118           96
     Other consumer                       14            4            8            6           12
-------------------------------------------------------------------------------------------------
                                          65           53          126          124          108
-------------------------------------------------------------------------------------------------
NET CHARGE-OFFS                         (429)      (1,103)      (1,175)        (608)        (258)
-------------------------------------------------------------------------------------------------

Allowance of Cicero Bank
at time of acquisition                    --          447          447           --           --

-------------------------------------------------------------------------------------------------
Ending Balance                       $ 2,085        2,111        2,114        2,667        3,040
-------------------------------------------------------------------------------------------------

Ratio of net charge-offs
     to average loans outstanding       0.21%        0.60%        0.62%        0.36%        0.17%
-------------------------------------------------------------------------------------------------
</TABLE>


                                       11



<PAGE>   12




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>

                                                             SEPTEMBER 30,           DECEMBER 31,
                                                           -----------------------------------------------
                                                            1997       1996     1996      1995      1994
                                                           ------     -----     -----     -----     -----

                                                                          (In Thousands)

Nonaccruing loans
<S>                                                        <C>        <C>       <C>         <C>       <C>
     Residential real estate mortgages                     $  999     1,029     1,359       271       317
     Commercial (1)                                         2,217     1,649     1,626     1,757     2,894
     Consumer                                                 228       153       186       110        40
---------------------------------------------------------------------------------------------------------
Total                                                      $3,444     2,831     3,171     2,138     3,251
=========================================================================================================

Other loans past due 90 days or more and still accruing:

     Residential real estate mortgages                     $   76      --        --        --        --

     Consumer (2)                                            --        --          29         1      --
     Commercial (1)                                          --         198       370      --         447
---------------------------------------------------------------------------------------------------------
Total                                                      $   76       198       399         1       447
=========================================================================================================
Restructured loans, not included above                       --        --        --       1,125       932
=========================================================================================================
Real estate owned                                             975       473       717       397       984
=========================================================================================================
Total assets containing specific risk elements             $4,495     3,502     4,287     3,661     5,614
=========================================================================================================
Ratio of total loans past due
90 days or more to gross loans                               1.66%     1.48%     1.73%     1.25%     2.05%
=========================================================================================================
Ratio of assets containing specific
risk elements to total assets                                1.82%     1.45%     1.77%     1.74%     2.78%
=========================================================================================================
(1) Includes commercial real estate loans.
(2) Consists primarily of Guaranteed Student Loans.
</TABLE>

Nonperforming assets (nonaccrual loans and real estate owned) totaled $4.4
million, or 1.8% of total assets at September 30, 1997, compared with $3.9
million, or 1.6% of total assets at December 31, 1996, and $3.3 million or 1.4%
at September 30, 1996. Included in nonperforming assets at September 30, 1997
were nonaccrual loans of $3.4 million or 1.6% of gross loans, compared with $3.2
million or 1.5% at December 31, 1996 and $2.8 million or 1.4% at September 30,
1996.

At September 30, 1997, nonaccrual loans were comprised of 29% residential
mortgages, 64% commercial loans and mortgages and 7% consumer loans. At
September 30, 1996, the breakdown was 36% residential mortgages, 58% commercial
loans and mortgages and 6% consumer loans.

The allowance for loan losses covered 60% of nonaccrual loans at September 30,
1997, compared with coverage of 67% at December 31, 1996 and 75% at September
30, 1996.

Impaired loans, which included troubled debt restructured loans, were $1.5
million and $2.6 million at September 30, 1997 and 1996, respectively. Included
in these amounts are $649,000 and $1.2 million of impaired loans for which the
related allowance for loan losses is $127,000 and $412,000, respectively. In
addition, included in the total impaired loans at September 30, 1997 and 1996
are $823,000 and $1.4 million, 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
three months and nine months ended September 30, 1997 was approximately $1.3
million.

The amount of interest income recognized on impaired loans for the three months
ended September 30, 1997 and 1996 was approximately $59,000 and $25,000,
respectively. The amount of interest income recognized on impaired


                                       12



<PAGE>   13




loans for the nine months ended September 30, 1997 and 1996 was approximately
$66,000 and $156,000 respectively. The Bank is not committed to lend additional
funds to these borrowers.

Potential problem loans at September 30, 1997 amounted to $2.2 million.
"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 $208.8 million at September 30, 1997, compared with $205 million
at December 31, 1996 and $204.2 million at September 30, 1996. A $4.1 million
decrease in time certificates in 1997 was offset by a $2.4 million increase in
savings accounts and a $5.1 million increase in NOW and demand accounts. Money
market accounts increased $1.4 million while escrow accounts decreased $1
million due to payments of property taxes on behalf of borrowers.

The Bank's deposit strategy for the past eighteen months 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 39.3% of total deposits at
September 30, 1997, up from 36.9% at December 31, 1996 and 36.3% at September
30, 1996. 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>

                                            SEPTEMBER 30,                               DECEMBER 31,
                             -------------------------------------------- ------------------------------------------
                                     1997                  1996                  1996                  1995
                             ---------------------- --------------------- --------------------- ---------------------
                                          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      $  41,185    19.73%     39,808     19.49%     38,690     18.87%     33,016    18.43%
                                                                                                         
Time certificates                103,341    49.49%    108,251     52.99%    107,429     52.39%     99,474    55.54%
                                                                                                         
Money market accounts             23,445    11.23%     21,937     10.74%     21,991     10.73%     21,448    11.98%
                                                                                                         
NOW accounts                      22,874    10.95%     19,506      9.55%     20,314      9.91%     13,244     7.39%
                                                                                                         
Demand accounts                   17,311     8.29%     14,022      6.86%     14,861      7.25%      9,927     5.54%
                                                                                                         
Escrow accounts                      650     0.31%        753      0.37%      1,744      0.85%      2,010     1.12%
-------------------------------------------------------------------------------------------------------------------
          Total                 $208,806   100.00%    204,277    100.00%    205,029    100.00%    179,119   100.00%
===================================================================================================================
</TABLE>

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

Stockholders' equity at September 30, 1997 was $17.3 million, or $18.15 per
share, compared with $16.2 million or $17.12 per share at December 31, 1996. At
September 30, 1997, the Bank's leverage capital ratio was 6.79% and its
risk-based capital ratio was 11.29%. Both capital measurements were in excess of
regulatory requirements.

In October 1997 the Company declared a dividend of $.10 per share payable on
November 18, 1997 to shareholders of record on November 4.


                                       13



<PAGE>   14




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

GENERAL
-------

Net income was $430,000 or $.45 per share for the third quarter of 1997,
compared with $405,000 or $.43 per share for the same period in 1996. Income
before taxes increased $231,000 or 53.7% compared with the year ago quarter. A
$287,000 increase in net interest income and a $188,000 increase in other
operating income offset increases in other operating expenses of $94,000 and a
$150,000 increase in loan loss provisions. Income taxes increased $206,000.

Net income for the nine months ended September 30, 1997 was $1.3 million or
$1.34 per share, up 20.7% from the year ago period. Income before taxes was $2
million for the first nine months of 1997, an increase of 75.9% from the year
ago period.

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 September 30,
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. No tax
equivalent adjustments were made.

<TABLE>
<CAPTION>
                                                       1997                                    1996
                                        ------------------------------------     -----------------------------------
                                          AVERAGE                   YIELD/        AVERAGE                   YIELD/
                                          BALANCE    INTEREST        RATE         BALANCE    INTEREST        RATE
                                        ------------------------------------     -----------------------------------
                                                                  (Dollars In Thousands)

Interest-earning assets:
<S>                                        <C>           <C>          <C>          <C>           <C>          <C>  
  Mortgage loans                           $155,583      $3,167       8.14%        $158,903      $3,140       7.90%
  Other loans                                56,407       1,311       9.22%          41,927       1,011       9.59%
--------------------------------------------------------------------------------------------------------------------
Total loans                                 211,990       4,478       8.43%         200,830       4,151       8.25%
--------------------------------------------------------------------------------------------------------------------
  Securities                                 18,775         310       6.55%          24,048         382       6.32%
  Federal funds sold                          4,632          66       5.65%           1,153          19       6.56%
--------------------------------------------------------------------------------------------------------------------
Total interest-earning assets               235,397       4,854       8.22%         226,031       4,552       8.04%
--------------------------------------------------------------------------------------------------------------------
Non-interest earning assets                  13,878           -                      14,284           -            
--------------------------------------------------------------------------------------------------------------------
Total assets                              $ 249,275       4,854                     240,315       4,552
--------------------------------------------------------------------------------------------------------------------

Interest-bearing liabilities:
  Deposits:
     Savings and club accounts           $   42,178         302       2.84%          39,420         282       2.85%
     Time certificates                      102,944       1,433       5.52%         108,706       1,535       5.62%
     Money market accounts                   23,479         219       3.70%          22,894         193       3.35%
     Now and escrow accounts                 24,110         127       2.09%          19,724         107       2.16%
--------------------------------------------------------------------------------------------------------------------
  Total interest-bearing deposits           192,711       2,081       4.28%         190,744       2,117       4.42%
--------------------------------------------------------------------------------------------------------------------
  Borrowings                                 18,531         301       6.44%          15,375         251       6.49%
--------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities          211,242       2,382       4.47%         206,119       2,368       4.57%
Non-interest-bearing deposits                18,195           -                      14,747           -
Non-interest-bearing liabilities              2,420           -                       3,567           -
--------------------------------------------------------------------------------------------------------------------
Total liabilities                           231,857       2,382                     224,433       2,368
Stockholders' equity                         17,418           -                      15,882           -
--------------------------------------------------------------------------------------------------------------------
Total liabilities and
  stockholders' equity                   $  249,275       2,382                     240,315       2,368  
--------------------------------------------------------------------------------------------------------------------
Net interest income/ interest rate
spread                                                    2,472       3.75%                       2,184       3.47%
--------------------------------------------------------------------------------------------------------------------
Net interest-earning assets/
  net yield on interest-earning assets   $   24,155                   4.20%          19,912                   3.86%
Ratio of interest-earning assets
  to interest-bearing liabilities                                     1.11                                    1.10
--------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       14



<PAGE>   15
 



Net interest income was $2.5 million for the three months ended September 30,
1997 compared with $2.2 million for the same period in 1996. For the first nine
months of 1997, net interest income was $7.1 million, compared with $5.9 million
in the first nine months of 1996. The increase for the quarter is attributable
to a $9.4 million increase in average earning assets combined with a 36 basis
point increase in the net interest margin.

Average loans outstanding in the third quarter of 1997 were $212 million,
compared with $200.8 million in the year ago quarter. As noted above, most of
this growth was in the Bank's consumer and commercial loan portfolios.

The Company's earning-asset yield increased 18 basis points in the third quarter
of 1997 compared with the year ago quarter, due mainly to a 18 basis point
increase on loan yields. Mortgage loan yields increased 24 basis points due in
part to slightly higher bond market interest rates and to a higher proportion of
the portfolio being commercial mortgages, while yields on other loans decreased
37 basis points due in large part to strong growth in consumer and commercial
loans with lower yields relative to the Bank's existing portfolio.

The average cost of interest-bearing liabilities decreased 10 basis points due
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 31.4% of average interest bearing deposits in the third
quarter of 1997, up from 28.8% in the year ago quarter. The cost of time
certificates decreased 10 basis points as some longer term, higher rate accounts
renewed at generally lower rates in the first half of 1997. In addition, many
customers moved their funds into shorter maturity accounts in the first nine
months of 1997 in anticipation of rising rates.

The net interest margin, which is equal to net interest income divided by
average interest-earning assets, was 4.20% for the third quarter of 1997, up
from 3.86% in the year ago quarter. The margin for the first nine months of 1997
was 4.12%, compared with 3.72% in the first nine months of 1996.

OTHER OPERATING INCOME

Total other operating income was $465,000 in the third quarter of 1997, an
increase of $188,000 or 67.9% from the third quarter of 1996. Other operating
income for the first nine months of 1997 was $1.3 million, up $578,000 or 76.4%
from the year ago period. Service charges and fee income generated by the growth
in the Company's checking and savings accounts has been the main contributor to
the increase.

OTHER OPERATING EXPENSES

Total other operating expenses were $2.1 million for quarter ended September 30,
1997, compared with $2 million for the same period in 1996. Other operating
expenses for the first nine months of 1997 were $6.1 million, compared with $5.4
million for the same period in 1996. The increase is directly attributable to
current and planned future asset growth.


                                       15



<PAGE>   16




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
         ------- Not applicable

         ITEM 5. Other Information
         ------- On October 14, 1997, the Company declared a cash dividend of
                 $.10 per share, payable on November 18, 1997 to shareholders of
                 record on November 4.

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

                 a. No.     Exhibit
                    ---     -------
                    27      Financial Data Schedule

                 b. On October 29, the Company filed a Form 8-K announcing the
                    declaration of a three-for-two stock split, in the form of a
                    50 percent stock dividend, payable on November 28, 1997 to
                    shareholders of record on November 12. The stock split will
                    increase the Company's shares outstanding by approximately
                    477,700 shares. The Company had 955,457 shares outstanding
                    on October 28.

                    Under the terms of the stock dividend, Skaneateles Bancorp
                    shareholders will receive a dividend of one share for every
                    two shares held on November 12. Fractional shares created by
                    the stock dividend will be paid in cash based upon the last
                    reported sale price on November 12, as adjusted for the
                    stock dividend, except for shareholders participating in the
                    Company's dividend reinvestment plan who will receive
                    fractional shares credited to their accounts.


                                       16



<PAGE>   17




                                   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: November 12, 1997
    --------------------------------                          -----------------
    John P. Driscoll
    Chairman, President and Chief
    Executive Officer

By: /s/ J. Daniel Mohr                                  Date: November 12, 1997
    --------------------------------                          -----------------
    J. Daniel Mohr
    Chief Financial Officer
    and Treasurer



                                      17