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, 1999

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


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

                     Commission File Number 0-24579
                     ------------------------------

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

Pennsylvania                                                     23 -1806857
(State or other jurisdiction of incorporation                 (IRS Employer
or organization)                                            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 May 5, 1999: 234,128





<PAGE>
                      CARNEGIE FINANCIAL CORPORATION

                               INDEX



                                                           Page
                                                          Number
                                                        ---------

PART I  - FINANCIAL INFORMATION

   Item 1. Financial Statements

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

           Consolidated Statement of Income
            (Unaudited) for the Three Months
             ended March 31, 1999 and 1998                  4

           Consolidated Statement of
             Changes in Stockholders' Equity
             (Unaudited) as of March 31, 1999               5

            Consolidated Statement of Cash
              Flows (Unaudited) for the Three
              Months ended March 31, 1999 and 1998          6

            Notes to Unaudited Consolidated
              Financial Statements                          7

   Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results
              of Operations                              8 - 13

PART II  -  OTHER INFORMATION

   Item 1.  Legal Proceedings                              14

   Item 2.  Changes in Securities                          14

   Item 3.  Default Upon Senior Securities                 14

   Item 4.  Submissions of Matters to a
              Vote of Security Holders                     14

   Item 5.  Other Information                              14

   Item 6.  Exhibits and Reports on Form 8 - K             14
SIGNATURES                                                 15


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

                                                March 31,        December 31,
                                                  1999             1998
                                              ------------     ------------
             ASSETS                           
Cash and due from banks                       $    226,922    $    316,515
Interest - bearing overnight                  
   deposits with other institutions                972,470         648,973
                                              ------------    ------------
Cash and cash equivalents                        1,199,392         965,488
                                              
Certificates of deposit                            199,000         199,000

Investment securities available               
   for sale                                      3,517,998       1,259,532
Investment securities held to                 
   maturity (fair value of                    
   $502,052 and $503,083)                          489,299         489,287
Mortgage - backed securities                  
   available for sale                              975,168       1,026,442
Mortgage - backed securities                  
   held to maturity (fair value               
   of $982,965 and $1,082,927)                     967,390       1,066,910
Loans receivable, (net of                     
   allowance for loan losses                  
   of $162,882 and $138,860)                    16,976,892      14,512,121
Premises and equipment                             244,290         248,228
Federal Home Loan Bank Stock                       300,000         102,900
Accrued interest receivable                        140,011         114,675
Other assets                                       204,151         100,061
                                              ------------    ------------
          TOTAL ASSETS                        $ 25,213,591    $ 20,084,644
                                              ============    ============
                                              
     LIABILITIES AND STOCKHOLDERS EQUITY      
Deposits                                      $ 15,728,537    $ 15,372,170
Borrowed funds                                   6,000,000       1,200,000
Advances from borrowers for taxes             
   and insurance                                   214,532         179,563
Accrued interest payable and                  
   other liabilities                               367,258         295,492
                                              ------------    ------------
          TOTAL LIABILITIES                     22,310,327      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                                   1,130,345       1,118,054
Unearned Employee Stock Ownership             
    Plan shares (ESOP)                            (176,157)      (180,918)
Unearned Restricted Stock Plan shares (RSP)        (76,890)              -
Accumulated other comprehensive income             (24,012)          4,434
Treasury Stock (3,922 shares, at cost)             (38,730)              -
                                              ------------    ------------
          Total stockholders' equity             2,903,264       3,037,419
                                              ------------    ------------
          Total liabilities and               
             stockholder's equity             $ 25,213,591    $ 20,084,644
                                              ============    ============
                                              
See accompanying notes to the unaudited consolidated financial statements.

3






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

                                              Three Months Ended
                                                   March 31,
                                         -----------------------------
                                              1999             1998
                                         -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                      $   301,791       $   215,879
   Investment securities
       Taxable                                35,743            25,093
       Exempt from federal
         income tax                            5,899             7,409
   Interest - bearing deposits
     in other banks                           23,559             7,387
   Mortgage - backed securities               33,273            44,226
   Dividends on Federal Home
     Loan Bank Stock                           3,466                 -
                                         -----------       -----------
        Total interest and
          dividend income                    403,731           299,994
                                         -----------       -----------
INTEREST EXPENSE
   Deposits                                  167,870           170,314
   Borrowings                                 48,750                 -
                                         -----------       -----------
           Total interest expense            216,620           170,314
                                         -----------       -----------
NET INTEREST INCOME                          187,111           129,680

Provision for loan losses                     24,021                 -
                                         -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                 163,090           129,680
                                         -----------       -----------
NONINTEREST INCOME
   Service fees                               19,379             6,355
   Gain on sale of investment
     securities                                1,167             2,147
   Other income                               14,101             5,060
                                         -----------       -----------
           Total noninterest income           34,647            13,562
                                         -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits         85,797            80,330
   Occupancy and equipment                    10,706            10,051
   Data processing charges                    18,286            17,741
   Loss on real estate owned                       -             3,191
   Other expense                              69,991            32,534
                                         -----------       -----------
           Total noninterest expense         184,780           143,847

                                         -----------       -----------
Income (loss) before income taxes             12,957              (605)

Income taxes                                     666                 -
                                         -----------       -----------
NET INCOME (LOSS)                        $    12,291       $      (605)
                                         ===========       ===========

Basic per share earnings                 $      0.06               N/A

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

Dilutive earnings per share              $      0.06               N/A
                                         ===========       ===========

See accompanying notes to the unaudited consolidated financial statements.

4

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


                                                          Unearned     Unearned   Accumulated 
                                Additional                 Shares      Shares     Other                                   Total
                       Common    Paid-in     Retained      Held by    Held by  Comprehensive  Treasury   Stockholders' Comprehensive
                       Stock     Capital     Earnings       ESOP        RSP       Income       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                                       12,291                                                          12,291    $ 12,291
Other comprehensive                                                                                       
income:                                                                                                   
 Unrealized loss                                                                                          
 on available for                                                                                         
 sale securities,                                                                                         
 net of                                                                                                   
 reclassification                                                                                         
 adjustment                                                                         (28,446)                    (28,446)    (28,446)
                                                                                                                            -------
Comprehensive                                                                                             
  income                                                                                                                   $(16,155)
                                                                                                                           ======== 
                                                                                                          
Stock purchased RSP                 (7,141)                              (80,937)                               (88,078)
Shares earned RSP                                                          4,047                                  4,047
Shares earned ESOP                                             4,761                                              4,761
Treasury stock                                                                                            
  purchased                                                                                    (38,730)         (38,730)
                                                                                                          
Balance,             --------   ----------   ----------    ---------  ----------   --------   ---------     ----------- 
  March 31, 1999     $ 23,805   $2,064,903   $1,130,345    $(176,157) $  (76,890)  $(24,012)  $(38,730)     $ 2,903,264
                     ========   ==========   ==========    =========  ==========   ========   =========     ===========
                                                                                                          
                                                                                                          
                                                                                               
Components of comprehensive
  income:  Change in net
  unrealized loss on investment
  securities held for sale                                                                                     $(27,676)
Realized gains included in
  net income, net of tax                                                                                           (770)
                                                                                                                -------
Total                                                                                                          $(28,446)
                                                                                                               ======== 

</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

5






<PAGE>
                      CARNEGIE FINANCIAL CORPORATION
            CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
                                                      Three Months Ended
                                                           March 31,
                                                      1999           1998
                                                  -----------    ---------
OPERATING ACTIVITIES
Net income (loss)                                      12,291        (605)
Adjustments to reconcile net income (loss) to net
   cash provided by (used for)operating activities:
    Depreciation, amortization and
       accretion, net                                  (2,002)        287
    Provision for loan losses                          24,021           -
    Amortization of unearned ESOP and RSP               8,808           -
    Gain on sale of securities                         (1,167)     (2,147)
    Decrease (increase) in accrued
       interest receivable                            (25,336)      5,136
    Increase in accrued interest payable              102,771      63,772
    Other, net                                       (120,441)     41,811
                                                     --------    --------
    Net cash provided by (used for)
       operating activities                            (1,055)    108,254
                                                     --------    --------
INVESTING ACTIVITIES

Investment securities available for sale:
    Purchases                                      (2,501,119)   (100,000)
    Proceeds from sales                               209,940     810,460
Mortgage-backed securities available for sale:
    Purchases                                        (111,463)   (322,233)
    Maturities and repayments                         162,045     290,326
Mortgage-backed securities held to maturity:
    Maturities and repayments                          99,503     118,042
Net increase in loans                              (2,488,792)   (957,796)
Purchases of Federal Home Loan Bank stock            (197,100)          -
Proceeds from sale of real estate owned                     -       2,977
Purchases of office properties and equipment          ( 2,583)     (9,679)
                                                   ----------  ----------
Net cash used for investing activities             (4,829,569)   (167,903)
                                                   ----------  ----------
FINANCING ACTIVITIES
Net increase (decrease) in deposits                   356,367    (149,319)
Proceeds from borrowed funds                        4,800,000           -
Purchase of treasury stock                            (38,730)          -
Purchase stock for RSP                                (88,078)          -
Net change in advances for taxes and insurance         34,969      (1,916)
                                                   ----------  ----------
Net cash provided by (used for)
    financing activities                            5,064,528    (151,235)
                                                   ----------  ----------
Increase (decrease) in cash and cash equivalents      233,904    (210,884)

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF YEAR                               965,488     950,891
                                                   ----------  ----------
CASH AND CASH EQUIVALENTS
   AT END OF YEAR                                   1,199,392     740,007
                                                   ==========  ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
  Interest on deposits and borrowings             $   113,849  $   106,542
  Income taxes                                          1,200            -

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 interim period.

Note 2 - EARNINGS PER SHARE

Earnings per share  computations  are based upon the  weighted  number of shares
outstanding  for the three months ended March 31, 1999.  The weighted  number of
shares  outstanding for the period was 219,271.  Net income used in the earnings
per share  calculation  was  $12,291.  Earnings per share  computations  are not
applicable for the period ending March 31, 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. At March 31, 1999 there were no dilutive effects on the computation.

Note 3  RESTRICTED STOCK BONUS PLAN (RSP)

In October 1998, the Board of Directors  adopted a RSP for certain  officers and
employees  which was  approved  by  stockholders  at a special  meeting  held on
January 11,  1999.  The  objective  of the Plan is to enable the Company and the
Bank to retain its corporate officers, key employees, and directors who have the
experience and ability necessary to manage these entities. Directors,  officers,
and key employees who are selected by members of the Board  appointed  committee
are eligible to receive  benefits under the RSP. The  non-employee  directors of
the  Company  and the  Bank  serve  as  trustees  for  the  RSP,  which  has the
responsibility  to invest all funds contributed by the Bank to the Trust for the
RSP.

In February 1999, the Trust purchased with funds  contributed by the Bank, 9,918
shares of the common  stock of which  9,522  shares  were  issued to  Directors,
officers and employees and 396 shares remained  unissued.  Directors,  officers,
and key employees who terminate their association with the Company shall forfeit
the right to any shares which were awarded but not earned.

Note 4 STOCK OPTION PLAN

In October  1998,  the Board of  Directors  adopted a Stock  Option Plan for the
directors,  officers,  and  employees  which was approved by  stockholders  at a
special  meeting  held on January 11, 1999.  An  aggregate  of 23,805  shares of
common stock of the Company were  reserved for future  issuance  under the plan.
Shares  issuable under the stock option plan may be from authorized but unissued
shares,  treasury  shares  or shares  purchased  on the open  market.  The stock
options  typically  have  expiration  terms  of ten  years  subject  to  certain
extensions  and  early  terminations.  The per share  exercise  price of a stock
option  shall be,  at a  minimum,  equal to the fair  value of a share of common
stock on the date the option is granted. Proceeds from the exercise of the stock
options are credited to common stock for the  aggregate par value and the excess
is credited to additional paid - in - capital.




7


<PAGE>



CARNEGIE FINANCIAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 4 STOCK OPTION PLAN (Continued)

The following table presents share data related to the stock option plan:

                                             Shares Under Option
                                             -------------------
                                               1999      Price
                                               ----      -----
   Outstanding, beginning of year                   -        -
   Granted during the year                     23,805   $ 8.50
   Canceled during the year                         -        -
   Exercised during the year                        -        -
                                             --------   ------
   Outstanding at end of period (price
     (at grant date $8.50)                     23,805   $ 8.50
                                             ========   ======

Note 5 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

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND DECEMBER 31,1998

Total assets  increased by  approximately  $5,129,000 or 25.5% to $25,214,000 at
March 31, 1999 from $20,085,000 at December 31, 1998. Borrowings of $4.8 million
in the first quarter primarily funded this increase with an additional  $356,000
derived from an increase in deposits.

Total investment and mortgage-backed  securities  increased  $2,108,000 or 54.9%
from $3,842,000 at December 31, 1998 to $5,950,000 at March 31, 1999. During the
first  quarter  the  Company  purchased  $2,613,000  of  investments,  of which,
$2,501,000  or 95.7%  were  U.S.  Government  Agencies.  These  investments  are
scheduled to mature form 2004 through 2029. This overall  increase was partially
offset by sales,  maturities  and  repayments of  investments  of $471,000.  The
overall increase is the result of management investing funds from FHLB advances.
As of  April  1,  1999,  in  accordance  with  FASB  Statement  133,  management
transferred  approximately  $500,000 of held to maturity securities to available
for  sale.  Management's  decision  to  transfer  these  securities  is based on
providing  additional  liquidity  in  light  of the  strong  loan  demand  it is
experiencing.

Net loans receivable  increased $2,465,000 or 17.0% from $14,512,000 at December
31, 1998 to  $16,977,000  at March 31, 1999  primarily due to the growing demand
within the Company's market area. Benefiting mostly from this environment is the
residential  real estate  portfolio  which  increased  $2,211,000  or 16.8%.  In
addition, the Company has relatively significant  commitments to fund loans as a
direct  result of the  economic  health  of the  Company's  market  area and the
competitive  pricing of its loan  products.  The  funding of the loan growth was
mainly provided by the usage of funds from the advances from the FHLB.

Advances from the Federal Home loan Bank of Pittsburgh increased $4.8 million to
$6.0 at March 31,  1999 from $1.2  million  at  December  31,  1998.  Management
entered into these  advances to fund the increased  demand for loans and as part
of the  Company's  leverage  strategy.  At March 31,  1999,  the Bank's  maximum
borrowing capacity with the FHLB was $11.2 million.

Stockholder's  equity  decreased  $134,000 to $2,903,000 at March 31, 1999, from
$3,037,000 at December 31, 1998 as a result of the Company  acquiring $39,000 of
treasury  stock and also by $77,000 due to the  implementation  of a  Restricted
Stock Plan for the benefit of key employees and  directors.  Unrealized  gain or
loss on securities  classified as available for sale decreased $30,000 to a loss
of $24,000 at March 31,  1999 from a gain  position  of $4,000 at  December  31,
1998.

9



<PAGE>
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1999 AND 1998

Net income  increased  $13,000 to $12,000 for the three  months  ended March 31,
1999 from a loss of $600 for the same  period  ended  1998.  This  increase  was
primarily  due to an  increase  in  interest  and  dividend  income of  $104,000
partially  offset by an increase in interest  expense of $47,000 and an increase
in noninterest expense of $41,000.

Interest and dividend income  increased  $104,000 or 34.6% from $300,000 for the
three  months  ended March 31, 1999 to $404,000  for the same period  1998.  Due
primarily  to an  increase  in  earnings  on loans of  $86,000  or 39.8%  and an
increase in income from interest  earning  deposits with other  institutions  of
$16,000 partially offset by a decrease in earnings on mortgage-backed securities
of $11,000 or 24.8%.  The  increase  in  interest  income on loans was due to an
increase in the average  principal  balance of $5,355,000  for loans in general,
and one-to-fourfamily residential loans specifically. As stated previously, this
increase is the result the economic  viability of the Company's  market area and
is being funded with  borrowings  from the Federal Home Loan Bank of Pittsburgh.
The  decrease  in interest  income on  mortgage-backed  securities  was also the
result of fluctuations  in average  balances as repayments were used to fund the
growth in loans and other investment  securities.  In addition,  the increase in
interest and dividend income was partially  offset by a yield decline from 7.69%
to 7.22% for the periods ending March 31, 1998 and 1999, respectively.

Interest  expense on deposits  increased  $47,000 or 27.2% from $170,000 for the
three months ended March 31, 1998 to $217,000 for the same period ended in 1999.
The  increase in  interest  expense  was due to a $4.7  million  increase in the
average  balance of  interest-bearing  liabilities  due to increased  borrowings
pursuant to the Company's leverage strategy partially offset by a 21 basis point
decrease in the average cost of interest-bearing liabilities.

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 $24,000 for the three months ended March 31, 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,
gains on sales of securities,  and other income  increased  $21,000 or 155.5% to
$35,000  for 1999  compared  to $14,000  for 1998 as a result of an  increase in
service  charges on deposit  accounts  of $13,000 due to an  increased  level of
transaction account activity and the addition of two ATMs Loan underwriting fees
increased  $8,000  due to the  increased  volume  of loans  recorded  in 1999 as
compared to the same period ended 1998.

Noninterest  expense increased $41,000 or 28.5% to $185,000 for the three months
ended March 31,  1999 from  $144,000  for the same  period  ended 1998 which was
substantially  all  result  of an  increase  in other  expense.  Other  expenses
increased $37,000 or 115.1% compared to the prior period due to costs associated
with the supplemental director retirement plan of $10,000. Professional fees and
stock  expenses  increased  by  $17,000  as a result  of costs  associated  with
conducting business as a public entity for the three months ended March 31, 1999
which were not present for the same period  ended 1998.  ATM costs  increased by
$8,000 as the Company  placed two new ATMs in service  during the fourth quarter
of 1998.

10


<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

Our   primary   sources  of  funds  are   deposits,   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 March 31, 1999, both the Company and
the  Bank  exceeded  the  minimum   risk-based   and  leverage   capital  ratios
requirements.  The Company's and Bank's total risk-based,  Tier I risk-based and
Tier I  leverage  ratios  are  24.9%,  25.9%,  23.6% and  24.8%,  12.7%,  12.4%,
respectively at March 31, 1999.

11


<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,
                                           1999            1998
                                       ------------     -----------
                                          (Dollars in thousands)

Loans on nonaccrual basis              $      38         $      57
Loans past due 90 days or
more and still accruing                        -                 -
                                       ---------         ---------

Total nonperforming loans                     38                57
                                       ---------         ---------
Real estate owned                              -                 -
                                       ---------         ---------
Total nonperforming assets                    38                57
                                       ---------         ---------

Nonperforming loans as a
percent of total loans                       .22%              .39%
                                       =========         =========

Nonperforming assets as a
 percent of total assets                     .15%              .28%
                                       =========         =========

Allowance for loan losses to
 nonperforming loans                      428.64%           243.61%
                                       =========         =========

Management  monitors  impaired loans on a continual basis. As of March 31, 1999,
impaired  loans had no material  effect on the Company's  financial  position or
results of operations.

During the three month period ended March 31, 1999,  loans increased  $2,489,000
and  nonperforming  loans increased  $19,000 while the allowance for loan losses
decreased  $24,000 for the same period.  The  percentage  of allowance  for loan
losses to loans  outstanding  remained  constant  at .95% at March 31, 1999 from
December  31, 1998.  Nonperforming  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 March 31, 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.


12


<PAGE>
YEAR 2000

Rapid and accurate data processing is essential to the Bank's  operations.  Many
computer  programs can only distinguish the final two digits of the year entered
(a common programming  practice in prior years) 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.

Bank's own computers and software.  The Bank has completed most of its year 2000
Testing and has found no material problems.  The Bank has corrected all problems
that were found during testing.  Other less essential software applications will
be modified  and/or  replaced  during 1999 would  enable all  internal  software
applications to become year 2000 compliant prior to year 2000. The Bank believes
that as a  result  of  modifications  to  existing  software  and  hardware  and
conversions to new software, the year 2000 problem can be mitigated. However, if
such  modifications  and  conversions  are not made,  or are not  Completed on a
timely basis,  the year 2000 problem could have a material adverse Impact on the
operations of the Bank.

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.  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.

13


<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

         On January 11, 1999, at a Special Meeting of Stockholders,  the Company
         announced that the following proposals were ratified:

         Restricted Stock Plan

         The  ratification  of the  Restricted  Stock Plan.  There were  129,729
         affirmative  votes  and  42,712  negative  votes.  The  number of votes
         abstaining were 1,800.

         Stock Option Plan

         The  ratification  of the 1999 Stock  Option  Plan.  There were 130,354
         affirmative  votes  and  42,087  negative  votes.  The  number of votes
         abstaining were 1,800.

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

          On  February  8,  1999  the  Company  filed a Form  8-K  (Items 5 & 7)
          announcing its intention to repurchase approximately 21,000 shares for
          its restricted stock plan and for general corporate purposes.

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

*   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.



13


<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 12, 1999             By: /s/ Shirley Chiesa
                                   --------------------------------------
                                   Shirley Chiesa
                                   President and Chief Executive Officer


Date: May 12, 1999             By: /s/ Joseph Pigoni
                                   --------------------------------------
                                   Joseph Pigoni
                                   Executive Vice President and CFO





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