10QSB
                                   Form 10QSB

                    U.S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                  Form 10-QSB

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

         For the quarterly period ended March 31, 1998

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

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

                        Commission File Number 333-48655
                                               ---------                 

                         CARNEGIE FINANCIAL CORPORATION
             ------------------------------------------------------
             (Exact name of Registrant as specified in its Charter)

              Pennsylvania                                 25-1806857
----------------------------------------------   -------------------------------
( State or other jurisdiction of incorporation   (I.R.S. Employer Identification
            or organization)                                Number)

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

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

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                               X   Yes              No
                             -----            -----

     As of June 26,  1998,  there  were no shares  of  the  Registrant's  common
stock,  par value $10.00 per share,  outstanding.  The  Registrant  has no other
classes of common equity outstanding.

     Transitional small business disclosure format:

                                   Yes          X   No
                             -----            -----
<PAGE>

                         CARNEGIE FINANCIAL CORPORATION
                                 AND SUBSIDARY
                             Carnegie, Pennsylvania

                                     Index

PART I.                                                                 Page (s)
-------                                                                 --------

FINANCIAL INFORMATION - Not Applicable...................................      3

PART II.
--------

OTHER INFORMATION

Item 1.  Legal Proceedings...............................................      4

Item 2.  Changes in Securities...........................................      4

Item 3.  Defaults Upon Senior Securities.................................      4

Item 4.  Submission of matters to a Vote of Security Holders.............      4

Item 5.  Other Information...............................................      4

Item 6.  Exhibits and Reports on form 8-K................................      4

Signatures...............................................................      5

                                       2
<PAGE>

                            PART I - NOT APPLICABLE

The  information  as  required  by part 1 of the Form  10-QSB  has been  omitted
because  the  conversion  from  the  mutual  to  stock  form of  ownership  (the
"Conversion"),  as described in the Form SB-2 (file no. 333-48655),  has not yet
occurred.  It is anticipated  that the Conversion  will be completed on or about
July 15, 1998.

                                       3
<PAGE>

                               OTHER INFORMATION

Part II.

Item 1.  Legal Proceedings
         -----------------
            None

Item 2.  Change in Securities
         --------------------
            Not Applicable

Item 3.  Defaults Upon Senior Securities
         -------------------------------
            Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------
            Not Applicable

Item 5.  Other Information
         -----------------
            None

Item 6.  Exhibits and Reports on Form 8-K
         ---------------------------------
              99      Financial Statements of Carnegie Savings Bank

                      No reports on Form 8-K were filed during the quarter ended
                      March 31, 1998.

                                       4
<PAGE>

                                   SIGNATURES

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

                                        CARNEGIE FINANCIAL CORP.

Date:          June 26, 1998            By /s/ Shirley Chiesa
          -----------------------          ------------------
                                               Shirley Chiesa
                                               (President)

Date:          June 26, 1998            By /s/ Joseph Pigoni
          -----------------------          -----------------
                                               Joseph Pigoni
                                               (Chief Financial Officer)
                                               (Chief Accounting Officer)
                                       5