UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                        Washington, D.C.   20552

                              FORM 10 - QSB

[X]    QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

For the quarterly period ended March 31, 2001

[ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT


For the transition period from                 to
                               ---------------    ---------------

                     Commission File Number 0-23765
                     ------------------------------

                     Carnegie Financial Corporation
          (Exact name of registrant as specified in its charter)

Pennsylvania                                                23-1806857
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)


             17 West Mall Plaza, Carnegie, Pennsylvania,  15106
                   (Address of principal executive offices)

                             (412) 276 - 1266
            (Registrant's telephone number, including area code)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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  [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:

              Class:  Common Stock, par value $.10 per share
                Outstanding at May 11, 2001: 224,776

<PAGE>
                      CARNEGIE FINANCIAL CORP

                               INDEX



                                                                          Page
                                                                         Number
                                                                       ---------

PART I  - FINANCIAL INFORMATION

   Item 1. Financial Statements

           Consolidated Balance Sheet
            (Unaudited) as of March 31,
             2001 and December 31, 2000                                     3

           Consolidated Statement of Income
            (Unaudited) for the Three Months
             ended March 31, 2001 and 2000                                  4

           Consolidated Statement of
             Changes in Stockholders' Equity
             (Unaudited) as of March 31, 2001                               5

            Consolidated Statement of Cash
              Flows (Unaudited) for the Three
              Months ended March 31, 2001 and 2000                          6

            Notes to Unaudited Consolidated
              Financial Statements                                          7

   Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results
              of Operations                                              8 - 14

PART II  -  OTHER INFORMATION

   Item 1.  Legal Proceedings                                              15

   Item 2.  Changes in Securities                                          15

   Item 3.  Default Upon Senior Securities                                 15

   Item 4.  Submissions of Matters to a
              Vote of Security Holders                                     15

   Item 5.  Other Information                                              15

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

SIGNATURES                                                                 16


<PAGE>
                         CARNEGIE FINANCIAL CORPORATION
                     CONSOLIDATED BALANCE SHEET (UNAUDITED)

                                          March 31,              December 31,
                                            2001                   2000
                                        ------------           ------------
             ASSETS
Cash and due from banks                 $    225,940          $    237,958
Interest - bearing overnight
   deposits with other institutions          570,972               564,330
                                        ------------          ------------
Cash and cash equivalents                    796,912               802,288

Certificates of deposit                      100,000               100,000
Investment securities available
   for sale                                1,145,000             1,249,382
Mortgage - backed securities
   available for sale                        577,321               609,050
Mortgage - backed securities
   held to maturity (fair value
   of $586,916 and $618,846)                 577,883               613,823
Loans receivable, (net of
   allowance for loan losses
   of $201,981 and $202,533)              22,417,410            22,385,789
Premises and equipment                       209,648               216,901
Federal Home Loan Bank Stock                 267,500               287,500
Accrued interest receivable                  139,918               135,412
Other assets                                 236,390               337,634
                                        ------------          ------------
          TOTAL ASSETS                  $ 26,467,982          $ 26,737,779
                                        ============          ============

     LIABILITIES AND STOCKHOLDERS EQUITY
Deposits                                $ 17,911,889          $ 17,498,223
Borrowed funds                             5,000,000             5,750,000
Advances from borrowers for taxes
   and insurance                             269,489               265,073
Accrued interest payable and
   other liabilities                         455,239               434,267
                                        ------------          ------------
          TOTAL LIABILITIES               23,636,617            23,947,563

STOCKHOLDERS' EQUITY
Preferred Stock, no par value;
    2,000,000 shares authorized;
    none issued                                    -                     -
Common Stock, $.10 par value;
    4,000,000 shares authorized
and 238,050 outstanding                       23,805                23,805
Additional paid - in capital               2,055,818             2,057,534
Retained Earnings - substantially
    restricted                             1,083,643             1,095,409
Unearned Employee Stock Ownership
    Plan shares (ESOP)                      (136,165)            (140,926)
Unearned Restricted Stock Plan shares (RSP)  (54,292)             (57,640)
Accumulated other comprehensive loss         (11,938)             (58,460)
Treasury Stock (13,274 shares, at cost)     (129,506)            (129,506)
                                        ------------          ------------
          Total stockholders' equity       2,831,365             2,790,216
                                        ------------          ------------
          Total liabilities and
             stockholder's equity       $ 26,467,982          $ 26,737,779
                                        ============          ============

See accompanying notes to the unaudited consolidated financial statements.

                                       3

<PAGE>
                     CARNEGIE FINANCIAL CORPORATION
              CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

                                              Three Months Ended
                                                   March 31,
                                         -----------       -----------
                                              2001             2000
                                         -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                      $   426,846       $   430,854
   Investment securities
       Taxable                                21,818            63,978
       Exempt from federal
         income tax                               --             1,658
   Interest - bearing deposits
     in other banks                            5,793             4,491
   Mortgage - backed securities               21,143            22,713
   Dividends on Federal Home
     Loan Bank Stock                           4,487             9,481
                                         -----------       -----------
        Total interest and
          dividend income                    480,087           533,175
                                         -----------       -----------
INTEREST EXPENSE
   Deposits                                  196,088           177,371
   Borrowings                                 77,429           132,646
                                         -----------       -----------
           Total interest expense            273,517           310,017
                                         -----------       -----------
NET INTEREST INCOME                          206,570           223,158

Provision for loan losses                      5,523            19,964
                                         -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                 201,047           203,194
                                         -----------       -----------
NONINTEREST INCOME
   Service fees                               22,438            20,981
   Gain on sale of investment
     securities                               10,452             5,635
   Other income                                1,649               355
                                         -----------       -----------
           Total noninterest income           34,539            26,971
                                         -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits         83,448            85,271
   Occupancy and equipment                    12,110            11,200
   Data processing charges                    20,221            16,644
   Other expense                              65,238            71,419
                                         -----------       -----------
           Total noninterest expense         181,017           184,534

                                         -----------       -----------
Income before income taxes                    54,569            45,631

Income taxes                                  20,855            16,999
                                         -----------       -----------
NET INCOME                               $    33,714       $    28,632
                                         ===========       ===========

Basic earnings per share earnings        $      0.16       $      0.14

                                         ===========       ===========

Dilutive earnings per share              $      0.16       $      0.14
                                         ===========       ===========

See accompanying notes to the unaudited consolidated financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                   CARNEGIE FINANCIAL CORPORATION
                                        CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


                                                                                        Accumulated
                                    Additional                 Unearned      Unearned      Other                  Total      Compre-
                           Common    Paid-in     Retained        ESOP          RSP     Comprehensive Treasury  Stockholders' hensive
                           Stock     Capital     Earnings       Shares        Shares       Loss       Stock       Equity     Income
                           -----     -------     --------       ------        ------       ----       -----       ------     ------
<S>                   <C>          <C>         <C>          <C>          <C>         <C>          <C>         <C>           <C>
Balance,
  December 31, 2000    $   23,805   $2,057,534  $1,095,409   $ (140,926)  $  (57,640) $ (58,460)  $(129,506)   $2,790,216

Net income                                          33,714                                                         33,714    $33,714
Other comprehensive
income:  Unrealized
gain on available
for sale
  securities, net of
    reclassification
  adjustment, net of
    taxes of $23,966                                                                     46,522                    46,522     46,522
                                                                                                                             -------
Comprehensive income                                                                                                         $80,236
                                                                                                                             =======
RSP Shares earned                                                             3,348                                 3,348
ESOP Shares earned                     (1,716)                   4,761                                              3,045
Cash dividends
  ($.20 per share)                                (45,480)                                                        (45,480)
                       ----------  ----------  ----------   ----------   ----------   ---------   ---------   -----------

Balance,
  March 31, 2001       $   23,805  $2,055,818  $1,083,643   $ (136,165)  $  (54,292)  $ (11,938)  $(129,506)  $ 2,831,365
                       ==========  ==========  ==========   ==========   ==========   =========   =========   ===========


Components of comprehensive
  income:  Change in net
  unrealized gain on investment
  securities available for sale                                                                                   $53,420
Realized gains included in
  net income, net of taxes of $3,554                                                                               (6,898)
                                                                                                                  -------
Total                                                                                                             $46,522
                                                                                                                  =======
</TABLE>


See accompanying notes to the unaudited consolidated financial statements.

                                       5
<PAGE>

                            CARNEGIE FINANCIAL CORP.
                CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

                                                      Three Months Ended
                                                           March 31,
                                                      2001           2000
                                                  -----------    ---------
OPERATING ACTIVITIES
Net income                                             33,714      28,632
Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation, amortization and
       accretion, net                                  (6,882)     (7,624)
    Provision for loan losses                           5,523      19,964
    Amortization of unearned ESOP and RSP               6,393       8,808
    Gain on sale of securities                        (10,452)     (5,635)
    Decrease in accrued interest receivable            (4,506)     28,915
    Increase (decrease) in accrued interest payable    75,909     (11,382)
    Other, net                                         22,340     (56,289)
                                                     --------    --------
    Net cash provided by operating activities         122,039       5,389
                                                     --------    --------
INVESTING ACTIVITIES
Investment securities available for sale:
    Purchases                                        (100,000)    (203,813)
    Proceeds from sales                               288,300       63,823
Mortgage-backed securities available for sale:
    Maturities and repayments                          42,887       19,251
Mortgage-backed securities held to maturity:
    Maturities and repayments                          35,940       25,422
Net increase in loans                                 (37,144)    (271,745)
Sale of Federal Home Loan Bank stock                   20,000            -
Purchases of office properties and equipment                -      (16,000)
                                                   ----------   ----------
Net cash provided by (used for)
    investing activities                              249,983     (383,062)
                                                   ----------   ----------
FINANCING ACTIVITIES
Net increase in deposits                              413,666      692,801
Payments of borrowed funds                           (750,000)    (537,500)
Net change in advances for taxes and insurance          4,416       22,008
Cash dividends paid                                   (45,480)           -
                                                   ----------   ----------
Net cash provided by (used for)
    financing activities                             (377,398)     177,309
                                                   ----------   ----------
Decrease in cash and cash equivalents                  (5,376)    (200,364)

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                             802,288      790,785
                                                   ----------   ----------
CASH AND CASH EQUIVALENTS
   AT END OF PERIOD                                   796,912      590,421
                                                   ==========   ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
  Interest on deposits and borrowings             $   197,608  $   321,399
  Income taxes                                              -       40,500

See accompanying notes to the unaudited consolidated financial statements.

                                       6
<PAGE>

CARNEGIE FINANCIAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

The consolidated  financial  statements of Carnegie  Financial  Corporation (the
"Company")  includes its wholly-  owned  subsidiary  Carnegie  Savings Bank (the
"Bank"). All significant intercompany items have been eliminated.

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with the  instructions  to Form  10-QSB and,  therefore,  do not
necessarily  include all information that would be included in audited financial
statements. The information furnished reflects all adjustments which are, in the
opinion  of  management,  necessary  for a  fair  statement  of the  results  of
operations.

All such adjustments are of a normal recurring nature. The results of operations
for the interim  periods  are not  necessarily  indicative  of the results to be
expected for the full year or any other future interim period.

Note 2 - EARNINGS PER SHARE

Earnings per share  computations  are based upon the  weighted  number of shares
outstanding for the period.  The weighted  number of shares  outstanding for the
three-month  period  ended  March 31,  2001 and 2000 was  205,407  and  200,861,
respectively.

The Company provides dual  presentation of Basic and Diluted earnings per share.
Basic  earnings per share  utilizes net income as reported as the  numerator and
the actual average shares  outstanding as the denominator.  Diluted earnings per
share  includes  any  dilutive  effects of options,  warrants,  and  convertible
securities.  At March 31,  2001 and 2000 there were no  dilutive  effects on the
Computation.

NOTE 3 - COMPREHENSIVE INCOME

The components of comprehensive  income consist  exclusively of unrealized gains
and losses on available  for sale  securities.  For the three months ended March
31,  2001,  this  activity is shown under the  heading  Comprehensive  Income as
presented in the Consolidated  Statement of Changes in Stockholders' Equity. For
the three months ended March 31, 2000, comprehensive income totaled $36,694.

                                       7
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

The Private  Securities  Litigation Act of 1995 contains safe harbor  provisions
regarding forward-looking  statements.  When used in this discussion,  the words
"believes,"  "anticipates,"  "contemplates,"  "expects," and similar expressions
are intended to identify forward-looking statements. Such statements are subject
to certain  risks and  uncertainties  that could cause actual  results to differ
materially from those projected.  Those risks and uncertainties  include changes
in interest rates,  the ability to control costs and expenses,  general economic
conditions,  government policies and actions of regulatory authorities. Carnegie
Financial  Corporation  ("the  Company")  undertakes  no  obligation to publicly
release the results of any revisions to those forward looking  statements  which
may be made to  reflect  events or  circumstances  after  the date  hereof or to
reflect the occurrence of unanticipated events.

References to the Company refer collectively to the Company and Carnegie Savings
Bank (the "Bank"), unless the context indicates otherwise.

Overview

         The  Bank   continues  to  be  under  a  Supervisory   Agreement   (the
"Agreement") with the Office of Thrift Supervision ("OTS"). The Agreement, among
other things,  places  restrictions on the Bank's growth.  Due to the Agreement,
total assets remained  relatively  unchanged at March 31, 2001 from December 31,
2000. The Agreement  will remain in place until  terminated by the OTS and could
adversely  affect the financial  conditions,  liquidity,  and  operations of the
Company. The Agreement was entered into with the OTS on April 14, 2000.

Asset/Liability Management

         The Company's  net interest  income is sensitive to changes in interest
rates, as the rates paid on interest-bearing liabilities generally change faster
than the rates  earned on  interest-earning  assets.  As a result,  net interest
income will frequently  decline in periods of rising interest rates and increase
in periods of decreasing interest rates.

         The board of directors attempts to manage the interest rate sensitivity
of the Company  through its asset and liability  committee  that is comprised of
the board of directors.  The board of directors  meets quarterly with management
to monitor the impact of interest  rate risk and develops  strategies  to manage
its  liquidity,  and reduce the  exposure to  interest  rate  fluctuations.  The
Agreement  with  the  OTS   identified  the  Bank's   interest  rate  levels  as
unacceptably  high and  required  the Bank to develop and pursue  strategies  to
reduce interest-rate risk.

Net Portfolio Value

         The Bank  computes  amounts by which the net present value of cash flow
from assets,  liabilities and off balance sheet items ("net portfolio  value" or
"NPV")  would  change  in the  event of a range of  assumed  changes  in  market
interest  rates.  Based upon OTS  assumptions,  the following table presents the
Bank's  percentage change in NPV, assuming an immediate change in interest rates
of plus or minus 300 basis points from the level at March 31, 2001.

                                       8
<PAGE>

                           Percentage Change in Net Portfolio Value
                           ----------------------------------------
         Changes
        in Market                                 Change in NPV
    Interest Rates                NPV Ratio(2)       Ratio(3)
    --------------                ------------    --------------
    (basis points)
        + 300                           6.01%         (727) bp
        + 200(1)                        8.32          (496) bp
        + 100                          10.82          (247) bp
            0                          13.29                --
        - 100                          14.53           124  bp
        - 200                          14.71           142  bp
        - 300                          14.93           165  bp


------------------
(1)  Denotes rate shock used to compute NPV capital ratios.
(2)  Calculated as the estimated NPV divided by present value of total assets.
(3)  Calculated  as the  excess  (deficiency)  of the  NPV  ratio  assuming  the
     indicated change in interest rates over the estimated NPV ratio assuming no
     change in interest rates.

         The  calculations in the above table indicate that the Bank's NPV would
be significantly  affected by increases in interest rates and favorably affected
by  decreases  in  interest  rates.   Computations  of  prospective  effects  of
hypothetical interest rate changes are based on numerous assumptions,  including
relative levels of market interest rates,  prepayments and deposit  run-offs and
should not be relied upon as indicative of actual results.  Certain shortcomings
are inherent in such  computations.  Although certain assets and liabilities may
have similar  maturity or periods of repricing they may react at different times
and in different  degrees to changes in the market interest rates.  The interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes  in market  interest  rates,  while  rates on other  types of assets and
liabilities  may lag behind changes in market  interest  rates.  Certain assets,
such as adjustable rate mortgages, generally have features that restrict changes
in interest rates on a short-term  basis and over the life of the asset.  In the
event of a change in interest  rates,  prepayments and early  withdrawal  levels
could deviate  significantly from those assumed in making calculations set forth
above. Additionally,  an increased credit risk may result as the ability of many
borrowers to service  their debt may  decrease in the event of an interest  rate
increase.

Results of Operations

         Net income increased $5,000 to $34,000 for the three months ended March
31,  2001 from  $29,000  for the same  period  ended  2000.  This  increase  was
primarily  due to an  increase  in  noninterest  income and a  reduction  in the
provision  for loan  losses  totaling  $22,000  that was  partially  offset by a
decline in net interest income of $17,000.

         Net interest  income before the provision for loan losses  decreased to
$207,000 for the current  three month period ended March 31, 2001 from  $223,000
for the same period in 2000.  The decrease in net interest  income was primarily
related to a decrease in the average principal balances of investment securities
of  $2,148,000.  In  response  to the  Agreement,  management  and the  board of
directors  sought to reduce  the  exposure  to  interest  rate  fluctuations  by
divesting of certain U.S.  Government Agency and

                                       9
<PAGE>

municipal  securities totaling $2,645,000 during the second quarter of 2000. The
proceeds were used by the Company to repay  certain  short-term  borrowings  and
improve its  interest  rate risk  position.  Although  net  interest  income was
primarily effected by fluctuations to average balances,  an increase in the cost
of funds of 8 basis  points  resulted in the interest  rate spread  declining to
2.46% for the three month  period  ended March 31, 2001 as compared to 2.54% for
the same period ended 2000.

                                       10

<PAGE>

Average Balance Sheet

         The  following  table sets forth  certain  information  relating to the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods presented. Average balances are derived from daily balances.

<TABLE>
<CAPTION>
                                                                            Three Months ended March 31,
                                                     -------------------------------------------------------------------------
                                                                  2001                                   2000
                                                     ----------------------------------    -----------------------------------
                                                                              (Dollars in thousands)
                                                     Average                  Average      Average                  Average
                                                     Balance     Interest    Yield/Cost    Balance     Interest    Yield/Cost
                                                     -------     --------    ----------    -------     --------    ----------
<S>                                                <C>           <C>           <C>       <C>           <C>          <C>
Interest-earning assets:
 Loans receivable(1).........................        $22,487       $ 427         7.59%     $22,810       $ 431        7.56%
 Mortgage-backed securities..................          1,189          21         7.12%       1,450          23        6.34%
 Investment securities.......................          1,187          22         7.35%       3,335          66        7.92%
 Other interest-earning assets(2)............            850          10         4.84%       1,014          14        5.52%
                                                      ------       -----                    ------         ---
  Total interest-earning assets..............         25,713         480         7.47%      28,609         534        7.47%
                                                                   -----                                 -----
Non-interest-earning assets..................            890                                   986
                                                     -------                               -------
  Total assets...............................        $26,603                               $29,595
                                                     =======                               =======
Interest-bearing liabilities:
 NOW accounts................................        $ 1,353           7         2.01%      $1,452           7        1.93%
 Savings accounts............................          4,930          48         3.86%       3,848          24        2.49%
 Certificates of deposit.....................         10,325         142         5.49%      10,700         146        5.46%
 Other liabilities...........................          5,222          77         5.93%       9,195         133        5.79%
                                                      ------       -----                    ------       -----
  Total interest-bearing liabilities........          21,830         274         5.01%      25,195         310        4.93%
                                                      ------       -----                    ------       -----
Non-interest bearing liabilities:............
 Other liabilities...........................          1,962                                 1,685
                                                     -------                               -------
 Total liabilities...........................         23,792                                26,880
                                                     -------                               -------
Stockholders' equity.........................          2,811                                 2,715
                                                     -------                               -------
 Total liabilities and stockholders' equity..        $26,603                               $29,595
                                                     =======                               =======
Net interest income..........................                      $ 206                                  $224
                                                                   =====                                  ====
Interest rate spread(3)......................                                    2.46%                                2.54%
                                                                                 ====                                 ====
Net yield on interest-earning assets(4)......                                    3.20%                                3.13%
                                                                                 ====                                 ====
Ratio of average interest-earning assets to
  average interest-bearing liabilities.......                                  117.79%                              113.55%
                                                                               ======                               ======
</TABLE>

---------------------------------
(1)  Average balances include non-accrual loans.
(2)  Includes investment-bearing deposits in other financial institutions.
(3)  Interest-rate spread represents the difference between the average yield on
     interest-earning   assets  and  the   average   cost  of   interest-bearing
     liabilities.
(4)  Net yield on  interest-earning  assets  represents net interest income as a
     percentage of average interest-earning assets.

                                       11
<PAGE>

Rate/Volume Table

         The following table sets forth certain information regarding changes in
our interest  income and interest  expense for the periods  indicated.  For each
category   of   interest-earning   assets  and   interest-bearing   liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes  in  average  volume  multiplied  by old rate);  (ii)  changes in rates
(changes in rate multiplied by old average volume).  Increases and decreases due
to both rate and volume have been allocated  proportionally to the change due to
volume and the change due to rate.

                                                    Three Months ended March 31,
                                                    ----------------------------
                                                          2001 vs. 2000
                                                    ----------------------------
                                                        Increase (Decrease)
                                                               Due to
                                                    ----------------------------
                                                     Volume     Rate       Total
                                                     ------     ----       -----
                                                            (In Thousands)
Interest income:
Loans receivable ..............................      $ (6)      $  2       $ (4)
Mortgage-backed securities ....................        (4)         2         (2)
Investment securities .........................       (42)        (2)       (44)
Other interest-earning assets .................        (2)        (2)        (4)
                                                     ----       ----       ----
  Total interest-earning assets ...............      $(54)      $ --       $(54)
                                                     ----       ----       ----
Interest expense:
 NOW accounts .................................      $ --       $ --       $ --
 Savings deposits .............................         7         17         24
 Certificates of deposit ......................        (5)         1         (4)
 Borrowed funds ...............................       (58)         2        (56)
                                                     ----       ----       ----
  Total interest-bearing liabilities ..........      $(56)      $ 20       $(36)
                                                     ----       ----       ----

Change in net interest income .................      $  2       $(20)      $(18)
                                                     ====       ====       ====

The  provision  for loan losses for the three month  period ended March 31, 2001
totaled  $6,000 as compared  to $20,000 for the same period in 2000.  During the
first  quarter of 2000,  the Company  incurred  loan  charge-offs  approximating
$42,000.  Such charge-offs  primarily  consisted of installment loans related to
the same borrowing  relationship.  Management continually evaluates the adequacy
of  the  allowance  for  loan  losses,   which   encompasses  the  overall  risk
characteristics of the various portfolio segments,  past experience with losses,
the impact of economic  conditions on borrowers and other relevant  factors that
may come to the  attention of  management.  Although the Company  maintains  its
allowance for loan losses at a level that it considers to be adequate to provide
for the inherent risk of loss in its loan  portfolio,  there can be no assurance
that  future  losses  will  not  exceed  estimated  amounts  or that  additional
provisions  for loan losses will not be  required in future  periods.  See "Risk
Elements".

         Noninterest  income,  which is comprised of service  charges on deposit
accounts,  gain on sale of  securities,  and other  income  increased  $8,000 to
$35,000 for the three  month  period  ended March 31,

                                       12
<PAGE>

2001 from  $27,000 for the same period in 2000.  An increase in the gain on sale
of  investment  securities at March 31, 2001 of $5,000  primarily  accounted for
this increase.

Liquidity And Capital Resources

         Liquidity  may be adversely  affected by unexpected  deposit  outflows,
excessive interest rates paid by competitors,  adverse publicity relating to the
savings and loan industry and similar  matters.  Management  monitors  projected
liquidity  needs  and  determines  the  level  desirable  based  in  part on the
Company's commitments to make loans and management's assessment of the Company's
ability to generate funds.

         Management  monitors both the Company's and the Bank's total risk-based
Tier I  risk-based  and Tier I  leverage  capital  ratios  in  order  to  assess
compliance with regulatory  guidelines.  At March 31, 2001, both the Company and
the  Bank  exceeded  the  minimum   risk-based   and  leverage   capital  ratios
requirements. At March 31, 2001, the Company's and Bank's total risk-based, Tier
I risk-based and Tier I leverage  ratios were 20.5%,  19.2%,  10.6%,  and 20.2%,
19.0%,  10.4%,  respectively.  The  capital  ratios for the Company and the Bank
could be adversely affected due to the Agreement.

                                       13
<PAGE>

Risk Element

The table below presents information  concerning  nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other real
estate loans,  and repossessed  assets. A loan is classified as nonaccrual when,
in the opinion of management,  there are serious doubts about  collectibility of
interest  and  principal.  At the time the accrual of interest is  discontinued,
future income is recognized only when cash is received.  Renegotiated  loans are
those  loans  which  terms  have been  renegotiated  to provide a  reduction  or
deferral  of  principal  or  interest  as a result of the  deterioration  of the
borrower.

                                                       March 31,    December 31,
                                                         2001          2000
                                                      ----------    -----------
                                                      (Dollars in thousands)

Loans on nonaccrual basis                             $   102    $      73
Loans past due 90 days or more and still accruing          --           --
                                                       ------       ------

Total nonperforming loans                                 102           73
                                                       ------       ------

Real estate owned                                          --           --
                                                       ======       ======

Total nonperforming assets                                102           73
                                                       ======       ======

Nonperforming loans as a percent of total loans          0.45%        0.32%
                                                       ======       ======

Nonperforming assets as a percent of total assets        0.39%        0.27%
                                                       ======       ======

Allowance for loan losses to nonperforming loans       198.04%      278.08%
                                                       ======       ======

Management  monitors  impaired loans on a continual basis. As of March 31, 2001,
impaired  loans had no material  effect on the Company's  financial  position or
results of operations.

Management believes the level of the allowance for loan losses at March 31, 2001
is sufficient; however, there can be no assurance that the current allowance for
loan losses will be adequate to absorb all future loan losses.  The relationship
between the allowance for loan losses and outstanding loans is a function of the
credit  quality and known risk  attributed to the loan  portfolio.  The on-going
loan  review  program  and  credit  approval  process is used to  determine  the
adequacy of the allowance for loan losses.

                                       14
<PAGE>


CARNEGIE FINANCIAL CORPORATION
PART II   OTHER INFORMATION

ITEM 1.  Legal Proceedings

         None

ITEM 2.  Changes in Securities

         None

ITEM 3.  Defaults upon Senior Securities

         None

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

         None

ITEM 5.  Other Information

         None

ITEM 6.  Exhibits and Reports on Form 8-K

         (a)  The following exhibits are incorporated as part of this report
<TABLE>
<CAPTION>
               <S>       <C>
                   3(i)    Articles of Incorporation of Carnegie Financial Corporation *
                   3(ii)   Bylaws of Carnegie Financial Corporation *
                   4       Specimen Stock Certificate *
                  10.1     Employment Agreement between the Bank and Shirley Chiesa *
                  10.2     Supplemental Executive Retirement Plan *
                  10.3     Form of Directors Consultation and Retirement Plan between the Bank and
                           each of the directors *
                  10.4     Carnegie Financial Corporation 1999 Stock Plan **
                  10.5     Carnegie Savings Bank Restricted Stock Plan **
                  99       Review Report of S.R. Snodgrass, A.C.
</TABLE>

---------------------
*        Incorporated  by reference to the identically  numbered  exhibit to the
         registration  statement  on Form  SB-2  (File No.  333-24579)  declared
         effective by the SEC on May 14, 1998.
**       Incorporated  by  reference  to the  Proxy  Statement  for the  Special
         Meeting on January  11,  1999 and filed  with the SEC on  December  10,
         1999.

          (b) Reports on Form 8-K

            No  reports on Form 8-K were  filed  during the last  quarter of the
period covered by this report.

                                       15

<PAGE>
                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  the  report  to be  signed  on its  behalf  by the
undersigned, thereunto duly authorized.


                                          Carnegie Financial Corporation


Date:  May 15, 2001                 By:   /s/ Shirley C.  Chiesa
                                          --------------------------------------
                                          Shirley C.  Chiesa
                                          President and Chief Executive Officer


Date:  May 15, 2001                 By:   /s/ Joseph Pigoni
                                          --------------------------------------
                                          Joseph Pigoni
                                          Vice President and CFO


                                       16