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 September 30, 1999

[ ]    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  incorporation  or
organization) (IRS Employer Identification No.)


                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 November 11, 1999: 226,148



<PAGE>
                             CARNEGIE FINANCIAL CORP

                                      INDEX



                                                           Page
                                                          Number
                                                        ---------

PART I - FINANCIAL INFORMATION

   Item 1. Financial Statements

           Consolidated Balance Sheet
            (Unaudited) as of September 30,
            1999 and December 31, 1998                          3

           Consolidated Statement of Income
            (Unaudited) for the Nine Months
            Ended September 30, 1999 and 1998                   4

           Consolidated Statement of Income
            (Unaudited) for the Three Months
            Ended September 30, 1999 and 1998                   5

           Consolidated Statement of
             Changes in Stockholders' Equity
             (Unaudited) as of September 30, 1999               6

            Consolidated Statement of Cash
              Flows (Unaudited) for the Nine
              Months Ended September 30, 1999 and 1998          7

            Notes to Unaudited Consolidated
              Financial Statements                              8

   Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results
              of Operations                                9 - 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)

                                          September 30,          December 31,
                                              1999                   1998
                                         ------------           ------------
         ASSETS
Cash and due from banks                   $    201,284          $    316,515
Interest - bearing overnight
   deposits with other institutions            173,592               648,973
                                          ------------          ------------
Cash and cash equivalents                      374,876               965,488

Certificates of deposit                        100,000               199,000
Investment securities available
   for sale                                  3,494,137             1,259,532
Investment securities held to
   maturity (fair value of $0 and $503,083)          -               489,287
Mortgage-backed securities
   available for sale                          823,490             1,026,442
Mortgage-backed securities
   held to maturity (fair value
   of $786,967 and $1,082,927)                 780,790             1,066,910
Loans receivable, (net of
   allowance for loan losses
   of $175,836 and $138,860)                21,271,630            14,512,121
Premises and equipment                         232,634               248,228
Federal Home Loan Bank stock                   514,900               102,900
Accrued interest receivable                    154,105               114,675
Other assets                                   235,326               100,061
                                          ------------          ------------
          TOTAL ASSETS                    $ 27,981,888          $ 20,084,644
                                          ============          ============

     LIABILITIES AND STOCKHOLDERS EQUITY
Deposits                                  $ 15,400,829          $ 15,372,170
Borrowed funds                               9,025,000             1,200,000
Advances from borrowers for taxes
   and insurance                               132,571               179,563
Accrued interest payable and
   other liabilities                           644,052               295,492
                                          ------------          ------------
          TOTAL LIABILITIES                 25,202,452            17,047,225

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                   2,064,903             2,072,044
Retained earnings - substantially
    restricted                               1,196,752             1,118,054
Unearned Employee Stock Ownership
    Plan shares (ESOP)                        (166,635)            (180,918)
Unearned Restricted Stock Plan shares (RSP)    (68,796)                    -
Accumulated other comprehensive income (loss) (152,063)                4,434
Treasury stock (11,902 shares, at cost)       (118,530)                    -
                                          ------------          ------------
          TOTAL STOCKHOLDERS' EQUITY         2,779,436             3,037,419
                                          ------------          ------------
          TOTAL LIABILITIES AND
             STOCKHOLDERS' EQUITY         $ 27,981,888          $ 20,084,644
                                          ============          ============

See accompanying notes to the unaudited consolidated financial statements.

                                       3




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

                                                Nine Months Ended
                                                   September 30,
                                              1999              1998
                                           -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                        $ 1,042,671       $   718,578
   Investment securities
       Taxable                                 154,727            94,845
       Exempt from federal
         income tax                             10,415            21,473
   Interest-bearing deposits
     in other banks                             35,606            24,477
   Mortgage-backed securities                   85,788           125,412
   Dividends on Federal Home
     Loan Bank stock                            17,190             2,107
                                           -----------       -----------
        Total interest and
          dividend income                    1,346,397           986,892
                                           -----------       -----------
INTEREST EXPENSE
   Deposits                                    480,268           515,960
   Borrowings                                  236,774                 -
                                           -----------       -----------
           Total interest expense              717,042           515,960
                                           -----------       -----------
NET INTEREST INCOME                            629,355           470,932

Provision for loan losses                       38,448                 -
                                           -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                   590,907           470,932
                                           -----------       -----------
NONINTEREST INCOME
   Service fees                                 62,513            21,770
   Investment securities gains (losses), net   (27,739)            2,606
   Other income                                 43,864            15,433
                                           -----------       -----------
           Total noninterest income             78,638            39,809
                                           -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits          254,687           234,404
   Occupancy and equipment                      31,778            29,320
   Data processing charges                      58,180            64,361
   Loss on real estate owned                         -            60,545
   Other expense                               205,036           100,167
                                           -----------       -----------
           Total noninterest expense           549,681           488,797
                                           -----------       -----------
Income before income taxes                     119,864            21,944

Income taxes                                    41,166               642
                                           -----------       -----------
NET INCOME                                 $    78,698       $    21,302
                                           ===========       ===========

Basic per share earnings                   $      0.37       $      0.13

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

Dilutive earnings per share                $      0.37       $       N/A
                                           ===========       ===========

See accompanying notes to the unaudited consolidated financial statements.

                                       4


<PAGE>


                         CARNEGIE FINANCIAL CORPORATION
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

                                                 Three Months Ended
                                                    September 30,
                                              1999              1998
                                           -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                        $   389,207       $   250,036
   Investment securities
       Taxable                                  64,416            45,526
       Exempt from federal
         income tax                              1,663             6,656
   Interest-bearing deposits
     in other banks                              3,246             9,837
   Mortgage-backed securities                   24,429            40,641
   Dividends on Federal Home
     Loan Bank stock                             7,943             1,686
                                           -----------       -----------
        Total interest and
          dividend income                      490,904           354,382
                                           -----------       -----------
INTEREST EXPENSE
   Deposits                                    152,912           171,412
   Borrowings                                  107,627                 -
                                           -----------       -----------
           Total interest expense              260,539           171,412
                                           -----------       -----------
NET INTEREST INCOME                            230,365           182,970

Provision for loan losses                            -                 -
                                           -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                   230,365           182,970
                                           -----------       -----------
NONINTEREST INCOME
   Service fees                                 20,833             7,933
   Gain on sale of investment securities             -               459
   Other income                                  7,228             4,846
                                           -----------       -----------
           Total noninterest income             28,061            13,238
                                           -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits           84,204            78,351
   Occupancy and equipment                      10,322             9,688
   Data processing charges                      19,828            29,161
   Loss on real estate owned                         -                 -
   Other expense                                65,511            37,832
                                           -----------       -----------
           Total noninterest expense           179,865           155,032
                                           -----------       -----------
Income before income taxes                      78,561            41,176

Income taxes                                    28,584             7,442
                                           -----------       -----------
NET INCOME                                 $    49,977       $    33,734
                                           ===========       ===========

Basic per share earnings                   $      0.24       $      0.08

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

Dilutive earnings per share                $      0.24       $       N/A
                                           ===========       ===========
See accompanying notes to the unaudited consolidated financial statements.

                                       5







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

<TABLE>
<CAPTION>

                                                               Unearned     Unearned   Accumulated
                                        Additional              Shares      Shares      Other                    Total       Compre-
                               Common   Paid-in    Retained    Held by      Held by   Comprehensive  Treasury  Stockholders' hensive
                               Stock    Capital    Earnings     ESOP          RSP     Income (Loss)    Stock     Equity      Income

                              ---------- -------- ---------- ----------   ----------   ----------   ----------   ----------  -------
<S>                         <C>     <C>         <C>        <C>         <C>           <C>             <C>      <C>         <C>

Balance, December 31, 1998    $23,805 $2,072,044  $1,118,054  $(180,918)  $        -    $   4,434           -  $3,037,419

Net income                                            78,698                                                       78,698  $ 78,698
Other comprehensive
 income:  Unrealized loss
 on available for sale
 securities, net of
 reclassification adjustment                                                             (156,497)               (156,497) (156,497)

Comprehensive                                                                                                              ---------
income                                                                                                                     $(77,799)
                                                                                                                           =========
Stock purchased RSP                       (7,141)                           (80,937)                              (88,078)
Shares earned RSP                                                            12,141                                12,141
Shares earned ESOP                                               14,283                                            14,283
Treasury stock purchased                                                                             (118,530)   (118,530)
                              ------- ----------  ----------   ----------  ----------   ----------   ---------- ----------

Balance, September 30, 1999   $23,805 $2,064,903  $1,196,752  $(166,635)   $(68,796)   $(152,063)   $(118,530) $2,779,436
                              ======= ==========  ==========   ==========  ==========   ==========   ========== ==========




Components of comprehensive income:
  Change in net unrealized loss on
    investment securities held for sale                                                             $(174,805)
  Realized loss included in net income, net of tax                                                     18,308
                                                                                                    ---------
Total                                                                                               $(156,497)
                                                                                                    ==========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

                                       6



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

                                                      Nine Months Ended
                                                         September 30,
                                                      1999         1998
                                                   ----------   ----------
OPERATING ACTIVITIES
Net income                                           $ 78,698    $ 21,302
Adjustments to reconcile net income to net cash
   provided by (used for) operating activities:
    Depreciation, amortization, and
       accretion, net                                  10,461    (427,090)
    Provision for loan losses                          38,448           -
    Loss on sale of real estate owned                       -      60,545
    Investment securities (gains) losses, net          27,739      (2,606)
    Increase in accrued interest receivable           (39,430)     (9,795)
    Increase in accrued interest payable              269,559     202,506
    Other, net                                         24,357     151,900
                                                   ----------   ----------
    Net cash provided by (used for)
      operating activities                            409,832      (3,238)
                                                   ----------   ----------
INVESTING ACTIVITIES
Investment securities available for sale:
    Purchases                                      (2,746,119) (2,216,998)
    Proceeds from sales                               792,344       2,606
    Maturities and repayments                               -   2,589,411
Investment securities held to maturity:
    Purchases                                               -    (250,000)
    Maturities and repayments                               -     225,000
Mortgage-backed securities available for sale:
    Purchases                                        (111,463)   (488,595)
    Maturities and repayments                         294,317     280,416
Mortgage-backed securities held to maturity:
    Maturities and repayments                         285,797     500,893
Net increase in loans                              (6,797,958) (2,635,276)
Purchases of Federal Home Loan Bank stock            (412,000)   (102,900)
Proceeds from sale of real estate owned                     -     419,781
Purchases of office properties and equipment           (4,420)    (40,857)
                                                   ----------   ----------
Net cash used for investing activities             (8,699,502) (1,716,519)
                                                   ----------   ----------
FINANCING ACTIVITIES
Net increase (decrease) in deposits                    28,659    (553,080)
Proceeds from short-term borrowings                 3,750,000           -
Proceeds from long-term borrowings                  4,075,000           -
Purchase of treasury stock                           (118,530)          -
Purchase stock for RSP                                (88,079)          -
Issuance of stock and additional paid-in capital            -   1,908,780
Net change in advances for taxes and insurance        (46,992)    (62,918)
                                                   ----------  -----------
Net cash provided by financing activities           7,600,058   1,292,782
                                                   ----------  -----------

Decrease in cash and cash equivalents                (689,612)   (426,975)

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                           1,064,488     950,891
                                                   ----------  -----------
CASH AND CASH EQUIVALENTS
   AT END OF PERIOD                                $  374,876  $  523,916
                                                   ==========  ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
  Interest on deposits and borrowings              $  447,483  $  313,453
  Income taxes                                          5,000      18,526

See accompanying notes to the unaudited consolidated financial statements.

                                       7


<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 fiscal year ended  December 31, 1999 or any other
interim period.

Note 2 - EARNINGS PER SHARE

Earnings per share  computations  are based upon the  weighted  number of shares
outstanding for the nine and  three-month  periods ended September 30, 1999. The
weighted number of shares outstanding was 213,521 and 208,364, respectively. Net
income used in the  earnings  per share  calculation  was  $28,721 and  $16,430,
respectively.  Earnings per share computations are not applicable for the period
ending June 30, 1998, as the Company  converted  from a  state-chartered  mutual
savings bank to a federally-chartered stock savings bank on July 10, 1998.

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.  For the nine and three-month  periods ended September 30, 1999, the
diluted number of shares outstanding from employee stock options was 213,797 and
208,518, respectively.

Note 3 INVESTMENT SECURITIES

In accordance  with the Financial  Accounting  Standards  Board ("FASB")  issued
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments  and  Hedging  Activities,"  effective  April 1, 1999,  the  Company
reclassified  investment securities from the held to maturity  classification to
available  for sale  classification  with an  amortized  cost of $489,000 and an
estimated market value of $502,000.

                                       8


<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,  and general
economic  conditions.  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.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1999 AND DECEMBER 31,1998

Total  assets  increased  by  approximately   $7,897,000  or  39.3  percent,  to
$27,982,000 at September 30, 1999 from  $20,085,000  at December 31, 1998.  This
growth was funded primarily through additional  borrowings from the Federal Home
Loan Bank of $7.8 million.

Total  investment and  mortgage-backed  securities  available for sale increased
$2,210,000 or 96.9 percent,  from  $2,286,000 at December 31, 1998 to $4,318,000
at September 30, 1999. Of the $2,858,000 of investments purchased, $2,746,000 or
96.1 percent,  were U.S.  Government  agencies.  These  investments,  which have
slightly lower yields,  primarily  mature between 15 and 30 years.  This overall
increase was partially  offset by repayments  of  mortgage-backed  securities of
$580,000  and  the  sale  of  $792,000  of U.S.  Government  Agency  securities.
Additionally,  the Company  obtained  financing  from the FHLB,  and reduced its
balances  with  deposits  in  other  institutions  to  fund  the  growth  of the
investment  and loan  portfolios.  As of April 1, 1999, in accordance  with FASB
Statement  No. 133,  management  transferred  approximately  $500,000 of held to
maturity securities to available for sale.

At September 30, 1999, the Company's  investment and mortgage-backed  securities
available  for sale  portfolios  totaled  $4.3 million or 15.4  percent,  of the
Company's total consolidated  assets.  Pursuant to generally accepted accounting
standards,  such  securities  are  recorded  at  current  market  value  and net
unrealized  gains or losses on such  securities  are excluded  from earnings and
reported  net of  income  taxes  as part of  comprehensive  income,  a  separate
component of stockholders' equity, until realized. At September 30, 1999, due to
increases  in  market  rates,   unrealized   losses  for  such  securities  were
approximately  $152,000 as compared to net gains at December 31, 1998 of $4,400.
Because of interest rate  volatility,  the Company's  accumulated  comprehensive
income and  stockholders'  equity could  materially  fluctuate  for each interim
period and year-end period. The majority of the unrealized loss at September 30,
1999  resulted  from  the  Company's   investment  in  U.S.   Government  agency
securities.  The decrease in market value of the investment securities available
for sale is considered temporary in nature and will not affect the Company's net
income until the securities are sold.

Net loans receivable increased  $6,760,000 or 46.6 percent,  from $14,512,000 at
December 31, 1998 to  $21,272,000  at September  30, 1999,  primarily due to the
growing demand for residential real estate within the Company's market area. The
residential  portfolio increased $6,760,000 during 1999 and was primarily driven
by engaging the services of a mortgage  broker,  which resulted in $5,061,000 in
new  residential  loans.  Although  such loans have an  average  origination  of
$230,000,  they are subject to the same  underwriting  guidelines  as is typical
within the Company's residential loan portfolio.

Advances  from the  Federal  Home loan  Bank of  Pittsburgh  ("FHLB")  increased
$7,825,000 to  $9,025,000 at September 30, 1999 from  $1,200,000 at December 31,
1998. As noted previously,  management  entered into these advances to fund loan
and investment  growth,  as well as to implement part of the Company's  leverage
strategy.  These  borrowings have  staggering  maturites from overnight lines of
credit to  five-year  advances.  At  September  30,  1999,  the  Bank's  maximum
borrowing capacity with the FHLB was $16.1 million.

                                       9


<PAGE>

COMPARISON OF  FINANCIAL CONDITION AT SEPTEMBER 30, 1999 AND   DECEMBER 31, 1998
(Continued)

Stockholders'  equity  decreased  $260,000 to  $2,779,000 at September 30, 1999,
from   $3,037,000  at  December  31,  1998.   Contributing  to  the  decline  in
stockholders'  equity was the Company acquiring treasury stock of $119,000,  the
implementation  of a Restricted  Stock Plan for the benefit of key employees and
directors  for $84,000,  and the  decrease in  accumulated  other  comprehensive
income  of  $156,000  due to a decline  in the  market  values of the  Company's
available for sale investment portfolio. These declines were partially offset by
net income of $79,000 for the nine months ended September 30, 1999.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED  SEPTEMBER 30,
1999 AND 1998

Net income increased  $57,000 to $79,000 for the nine months ended September 30,
1999,  from net income of $21,000 for the same period ended 1998.  This increase
was primarily due to an increase in net interest  income of $158,000 while being
partially  offset  by  an  increases  in  the  provision  for  loan  losses  and
noninterest expense of $38,000 and $61,000, respectively.

Total  interest  and  dividend  income  increased  $361,000 or 36.4 percent from
$987,000 for the nine months ended September 30, 1998 to $1,346,000 for the same
period  ended 1999.  Increases  in the average  principal  balances of loans and
investment  securities  of  $6.9  million  and  $670,000  primarily  fueled  the
increases in related interest income of $324,000 and $50,000,  respectively. The
effect of the  increase in average  balance was  partially  offset by a 50 basis
point  reduction  in yield on  earning  assets.  As noted  previously,  the loan
portfolio  was  heavily  influenced  by the  increase in  residential  mortgages
originated  through a mortgage broker while  securities  available for sale were
being purchased from the repayment of mortgage-backed securities and from excess
deposits  in other  financial  institutions.  The  impact  of this  increase  in
interest  income is offset by the decline in the average  principal  balances of
mortgage-backed securities of $677,000.

Interest  expense on deposits,  which decreased  slightly,  was $480,000 for the
nine months ended  September  30, 1999  compared to $516,000 for the same period
ended in 1998. There were decreases in the average balances of  interest-bearing
demand and  certificates of deposit of $1.1 million and $252,000,  respectively.
While there was a decline in interest  expense on deposits,  interest expense on
borrowings  increased  by  $237,000,  resulting  in a net  increase  in interest
expense of $201,000.  The overall  increase in interest  expense resulted from a
$6.2 million increase in average borrowings with the FHLB.

Based upon management's  continuing  evaluation of 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,  the provision for loan
losses  increased  by $38,000  for the nine  months  ended  September  30,  1999
compared to the same period ended 1998.  This  increase is primarily  due to the
growth of the loan portfolio as discussed above. See "Risk Elements."

Noninterest  income,  which is comprised of service charges on deposit accounts,
investment securities gains (losses), net, and other income increased $39,000 or
97.5 percent to $79,000 for 1999 compared to $40,000 for 1998.  Service  charges
on deposit accounts  increased  $41,000 due to an increased level of transaction
account activity and the addition of two ATMs. Increases in fees associated with
loan  underwriting  and  processing  accounted  for the  majority of the $28,000
increases to other income.  Partially  offsetting  these  increase was a $28,000
loss on the sale of investment securities.

                                       10


<PAGE>

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED  SEPTEMBER 30,
1999 AND 1998 (Continued)

Noninterest expense, which increased $61,000 or 12.4 percent to $550,000 for the
nine months  ended  September  30, 1999 from  $489,000 for the same period ended
1998, was substantially  effected by increases of $105,000 in other expenses and
$20,000 in  compensation  and employee  benefits.  Increases  to other  expenses
consisted of the following:  costs  associated  with the  supplemental  director
retirement  plan of $31,000;  professional  fees;  and stock expenses of $64,000
resulting from costs associated with conducting  business as a public entity for
the nine months ended  September  30,  1999,  as compared to $3,000 for the same
period in 1998.  In addition,  ATM costs of $20,000 were incurred in 1999 as the
Company  placed  two new ATMs in  service  during  the  fourth  quarter of 1998.
Increases to compensation and employee benefits are attributable to implementing
the ESOP and RSP in July 1998 and January 1999,  respectively.  Offsetting these
increases  was a decline in the loss on real estate  operations of $61,000 which
was recognized in 1998.

Income tax expense  increased  $40,000  from  $1,000 for the nine  months  ended
September 30, 1998 to an expense of $41,000 for the same period ended 1999. This
increase in due to an increase in 1999 over 1998 of pre-tax income of $98,000.

COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1999 AND 1998

Net income increased $16,000 to $50,000 for the three months ended September 30,
1999 from income of $34,000 for the same period  ended 1998.  This  increase was
primarily due to an increase in net interest  income of $47,000 and  noninterest
income of $15,000  while  partially  being offset by an increase in  noninterest
expense and income tax expense of $25,000 and $21,000, respectively.

Total  interest and dividend  income  increased  $137,000 or 38.5 percent,  from
$354,000 for the three months ended  September 30, 1998 to $491,000 for the same
period  ended  1999.  Interest  income  on loans  increased  $139,000  due to an
increase in the average  principal balance of $8,272,000 from the same period in
1998.  This increase in income from volume was offset by a decrease in the yield
of  interest-earning  assets  from  7.90  percent  for the  three  months  ended
September 30, 1998 to 7.44 percent for the same period ended 1999.  The decrease
in yield is due to the declining yield of loans and  mortgage-backed  securities
during this same time period.

Total interest expense  increased $90,000 to $261,000 for the three months ended
September 30, 1999,  from $171,000 for the same period ended 1998. This increase
was derived  from an increase in the average  principal  balances of  borrowings
from the FHLB of approximately $8.1 million which corresponded to an increase of
$108,000 in interest  expense.  Offsetting this increase were market declines in
the cost of funds  for  certificates  of  deposit  and  interest-bearing  demand
deposits of 62 and 55 basis points, respectively.

Based upon management's  continuing  evaluation of 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,  no provision for loan
losses was  recorded for the three  months  ended  September  30, 1999 and 1998,
respectively. See "Risk Elements."

Noninterest  income  increased from $15,000 for the three months ended September
30, 1999 to $28,000  from the same period  ended  September  30,  1998.  Service
charges  on  deposit  accounts  increased  $13,000.  As noted  previously,  such
increases  were due  primarily  to an  increased  level of  transaction  account
activity, and the addition of two ATMs.

Noninterest expense increased from $155,000 for the three months ended September
30, 1998 to $180,000 for the same period  ended 1999.  Other  expense  increased
$27,000  due to,  as noted  above,  increases  to other  expenses  consisted  of
increased  costs  associated with the  supplemental  director  retirement  plan,
professional fees and stock expenses,  ATM costs, and the  implementation of the
ESOP and RSP.

                                       11


<PAGE>


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1999 AND 1998 (Continued)

Income tax expense  increased  from $7,000 for the three months ended  September
30,  1999 to  $29,000  for the same  period  1999.  This  increase  is due to an
increase in 1999 over 1998 of pre-tax income of $37,000.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of funds are deposits,  advances from the FHLB, repayment of
loans   and    mortgage-backed    securities,    maturities   of    investments,
interest-bearing  deposits with other banks, and funds provided from operations.
While  scheduled   repayments  of  loans  and  mortgage-backed   securities  and
maturities of investment  securities are predictable  sources of funds,  deposit
flows and loan  prepayments  are  greatly  influenced  by the  general  level of
interest  rates,  economic  conditions,  and  competition.  We  use  our  liquid
resources principally to fund loan commitments, maturing certificates of deposit
and demand deposit withdrawals,  to invest in other interest-earning assets, and
to meet operating expenses.

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 Bank's commitments
to make loans and  management's  assessment  of the Bank's  ability to  generate
funds.

Management  monitors both the Company's and the Savings Bank's Total Risk-based,
Tier I  Risk-based,  and Tier I  Leverage  Capital  ratios  in  order to  assess
compliance with regulatory  guidelines.  At September 30, 1999, both the Company
and the  Bank  exceeded  the  minimum  risk-based  and  leverage  capital  ratio
requirements.  The Company's and Bank's Total Risk-based, Tier I Risk-based, and
Tier I Leverage  ratios were 21.2 percent, 20.0  percent,  10.3 percent and 19.0
percent, 17.8 percent, and 9.1 percent, respectively at September 30, 1999.

Due to the year 2000, management has instituted a cash contingency plan in order
to meet the possible larger cash withdrawals of customers in December 1999. Such
plan may decrease the Company's  investment in  interest-earning  assets and may
increase its  investment in  interest-bearing  liabilities,  which may cause the
Company's net income to slightly decrease in the 1999 fourth quarter.

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.

                                       12



<PAGE>

RISK ELEMENT (Continued)

                                       September 30,      December 31,
                                           1999            1998
                                       ------------     -----------
                                          (Dollars in thousands)

Loans on nonaccrual basis              $      21         $      57
Loans past due 90 days or
 more and still accruing                       -                 -
                                       ---------         ---------

Total non-performing loans                    21                57
                                       ---------         ---------
Real estate owned                              -                 -
                                       ---------         ---------
Total non-performing assets                   21                57
                                       ---------         ---------

Non-performing loans as a
 percent of total loans                     0.10%             0.39%
                                       =========         =========

Non-performing assets as a
 percent of total assets                    0.08%             0.28%
                                       =========         =========

Allowance for loan losses to
 Non-performing loans                     837.31%           243.61%
                                       =========         =========

Management  monitors  impaired loans on a continual  basis.  As of September 30,
1999,  impaired loans had no material effect on the Company's financial position
or results of operations.

During  the  nine-month   period  ended  September  30,  1999,  loans  increased
$6,796,000,  non-performing  loans decreased $36,000, and the allowance for loan
losses  increased  $38,000 for the same period.  The percentage of allowance for
loan losses to loans outstanding  declined slightly to 0.82 percent at September
30,  1999 from 0.95  percent at  December  31,  1998.  Non-performing  loans are
primarily  made up of  one-to-four  family  residential  mortgages  and consumer
loans.  The collateral  requirements  on such loans reduce the risk of potential
losses to an acceptable level in management's opinion.

Management  believes the level of the allowance for loan losses at September 30,
1999  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.

YEAR 2000

Rapid and accurate data processing is essential to the Bank's  operations.  Many
computer  programs  that can only  distinguish  the final two digits of the year
entered are  expected  to read  entries for the year 2000 as the year 1900 or as
zero and incorrectly attempt to compute payment, interest, delinquency and other
data.  The  Bank has  been  evaluating  both  information  technology  (computer
systems) and non-information  technology systems (e.q. vault timers,  electronic
door lock, and elevator controls).  Based upon such evaluations,  management has
determined  that the Bank has year  2000 risk in three  areas:  (1)  Bank's  own
computer and software; (2) computers of others used by the Bank's borrowers; and
(3)  computers  of others  who  provide  the Bank  with  processing  of  certain
services.

                                       13

<PAGE>

YEAR 2000 (Continued)

Bank's own computers and software.  The Bank has completed its year 2000 testing
and has found no material  problems.  The Bank has  corrected  all problems that
were found during testing.  The Bank believes that as a result of  modifications
to existing software and hardware and conversions to new software, the year 2000
problem has been mitigated. The majority of the costs associated with the Bank's
own computers and software were incurred  during 1998.  The Bank does not expect
to have any material costs for such areas in 1999.

Computers of others used by our borrowers.  The Bank has evaluated most of their
borrowers  and does not believe the year 2000  problem  should,  on an aggregate
basis, impact their ability to make payments to the Bank. The Bank believes that
most of their  residential  borrowers are not dependent on their home  computers
for income and that none of their commercial  borrowers are so large that a year
2000 problem  would render them unable to collect  revenue or rent and, in turn,
continue  to make loan  payments  to the  Bank.  The Bank  does not  expect  any
material  costs to  address  this  risk  area and  believes  they are year  2000
compliant in this risk area.

Computers of others who provide us with processing of certain services.  Because
we  primarily  contract  with  outside  vendors  for  our  computer  application
programs, we believe our principal risk relating to year 2000 issues lies in the
potential  inability  of those  vendors to process  date  sensitive  information
involving  the year 2000.  This risk is  primarily  focused  on one third  party
service bureau that provides  virtually all of the Bank's data  processing.  The
service bureau has communicated that it is substantially year 2000 compliant and
subsequent results of testing by the Bank have been positive.

Contingency  Plan.  The Bank will continue  monitoring  their service  bureau to
evaluate whether its data processing system will fail and is being provided with
periodic updates on the status of testing and upgrades being made by the service
bureau.  If the Bank service  bureau  fails,  the Bank will attempt to locate an
alternative  service  bureau  that  is  year  2000  compliant.  If the  Bank  is
unsuccessful,  the Bank  will  enter  deposit  balances  and  interest  with its
existing  computer  system.  If  this  labor-intensive  approach  is  necessary,
management  and employees  will become much less  efficient.  However,  the Bank
believes  that they would be able to operate in this  manner in the  short-term,
until their existing  service  bureau,  or their  replacement,  is able to again
provide data processing  services.  If very few financial  institution  services
bureaus were operating in the year 2000, the Bank's replacement costs,  assuming
the Bank could  negotiate an agreement,  could be material.  The above items are
documented in the Bank's written contingency plan which has been approved by the
Board of Directors.

Despite  management's  best  efforts to address  the year 2000  issue,  the vast
number of external entities that have direct and indirect business relationships
with the Bank, such as customers,  vendors,  payment system  providers,  utility
companies, and other financial institutions, make it impossible to assure that a
failure to achieve  compliance by one or more of these entities would not have a
material adverse impact on the Bank's business or on the Company's  consolidated
financial statements.
                                       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

          3.1 Articles of Incorporation of Carnegie Financial Corporation
          3.2 Bylaws of Carnegie Financial Corporation *
          4.0 Specimen Stock Certificate *
         10.1 Employment agreement between Carnegie Savings Bank and
                   Shirley Chiesa
         10.2 Restricted Stock Plan **
         10.3 1999 Stock Option Plan **
         27.0 Financial Data Schedule (electronic filing only)

          (b) Reports on Form 8-K

         There were no reports filed under Form 8-K for the period under report.

--------------------------------------------------------------------------------

*    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 of
     stockholders  on January 11,  1999 and filed with the SEC on  December  10,
     1998.



                                       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: NOVEMBER 12, 1999     By:     \s\Shirley Chiesa
                                   --------------------------------------
                                   Shirley Chiesa
                                   President and Chief Executive Officer


Date: NOVEMBER 12, 1999     By:    \s\Joseph Pigoni
                                   --------------------------------------
                                   Joseph Pigoni
                                   Vice President and CFO





                                       16