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 June 30, 2000

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


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

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

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

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


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

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


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or such  shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.
                                      Yes  [X]         No  [ ]

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

              Class:  Common Stock, par value $.10 per share
                Outstanding at August 10, 2000: 224,776


<PAGE>
                      CARNEGIE FINANCIAL CORP

                               INDEX



                                                           Page
                                                          Number
                                                        ---------

PART I  - FINANCIAL INFORMATION

   Item 1. Financial Statements

           Consolidated Balance Sheet
            (Unaudited) as of June 30,
             2000 and December 31, 1999                     3

           Consolidated Statement of Income
            (Unaudited) for the Six Months
             ended June 30,  2000 and 1999                  4

             Consolidated Statement of Income
            (Unaudited) for the Three Months
             ended June 30,  2000 and 1999                  5

           Consolidated Statement of
             Changes in Stockholders' Equity
             (Unaudited) as of June 30,  2000               6

            Consolidated Statement of Cash
              Flows (Unaudited) for the Six
              Months ended June 30, 2000 and 1999           7

            Notes to Unaudited Consolidated
              Financial Statements                          8

   Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results
              of Operations                              9 - 16

PART II  -  OTHER INFORMATION

   Item 1.  Legal Proceedings                              17

   Item 2.  Changes in Securities                          17

   Item 3.  Default Upon Senior Securities                 17

   Item 4.  Submissions of Matters to a
              Vote of Security Holders                     17

   Item 5.  Other Information                              17

   Item 6.  Exhibits and Reports on Form 8 - K             18

SIGNATURES                                                 19


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

                                          June 30,              December 31,
                                            2000                   1999
                                        ------------           ------------
             ASSETS
Cash and due from banks                 $    215,105          $    504,005
Interest - bearing overnight
   deposits with other institutions          555,388               286,780
                                        ------------          ------------
Cash and cash equivalents                    770,493               790,785

Certificates of deposit                      100,000               100,000
Investment securities available
   for sale                                1,422,565             3,323,894
Investment securities held to
   maturity (fair value of
   $0 and $144,870)                                0               145,000
Mortgage - backed securities
   available for sale                        655,640               690,164
Mortgage - backed securities
   held to maturity (fair value
   of $686,593 and $750,369)                 685,788               743,385
Loans receivable, (net of
   allowance for loan losses
   of $184,333 and $203,648)              22,507,219            22,518,456
Premises and equipment                       229,963               225,827
Federal Home Loan Bank Stock                 322,800               564,900
Accrued interest receivable                  139,241               180,797
Other assets                                 278,099               205,393
                                        ------------          ------------
          TOTAL ASSETS                  $ 27,111,808          $ 29,488,601
                                        ============          ============

     LIABILITIES AND STOCKHOLDERS EQUITY
Deposits                                $ 17,184,414          $ 16,551,544
Borrowed funds                             6,455,000             9,537,500
Advances from borrowers for taxes
   and insurance                             351,519               275,758
Accrued interest payable and
   other liabilities                         436,841               431,191
                                        ------------          ------------
          TOTAL LIABILITIES               24,427,774            26,795,993

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               2,060,431             2,062,493
Retained Earnings - substantially
    restricted                             1,057,843             1,203,806
Unearned Employee Stock Ownership
    Plan shares (ESOP)                      (152,352)            (161,874)
Unearned Restricted Stock Plan shares (RSP)  (56,656)             (64,750)
Accumulated other comprehensive loss        (119,531)            (241,366)
Treasury Stock (13,274 shares, at cost)     (129,506)            (129,506)
                                        ------------          ------------
          Total stockholders' equity       2,684,034             2,692,608
                                        ------------          ------------
          Total liabilities and
             stockholder's equity       $ 27,111,808         $ 29,488,601
                                        ============          ============

See accompanying notes to the unaudited consolidated financial statements.

3
<PAGE>
                         CARNEGIE FINANCIAL CORPORATION
                  CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)

                                               Six Months Ended
                                                    June 30,
                                         -----------       -----------
                                              2000             1999
                                         -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                      $   866,100       $   653,464
   Investment securities
       Taxable                               107,221            90,311
       Exempt from federal
         income tax                            2,781             8,752
   Interest - bearing deposits
     in other banks                            9,694            32,360
   Mortgage - backed securities               45,677            61,360
   Dividends on Federal Home
     Loan Bank Stock                          17,403             9,246
                                         -----------       -----------
        Total interest and
          dividend income                  1,048,876           855,493
                                         -----------       -----------
INTEREST EXPENSE
   Deposits                                  358,889           327,356
   Borrowings                                253,069           129,147
                                         -----------       -----------
           Total interest expense            611,958           456,503
                                         -----------       -----------
NET INTEREST INCOME                          436,918           398,990

Provision for loan losses                     52,414            38,448
                                         -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                 384,504           360,542
                                         -----------       -----------
NONINTEREST INCOME
   Service fees                               49,858            41,680
   Loss on sale of investment
     securities                             (283,588)          (27,739)
   Other income                                2,042            36,636
                                         -----------       -----------
           Total noninterest income         (231,688)           50,577
                                         -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits        168,603          170,483
   Occupancy and equipment                    22,273           21,456
   Data processing charges                    33,341           38,352
   Other expense                             155,682          139,525
                                         -----------       -----------
           Total noninterest expense         379,899          369,816

                                         -----------       -----------
Income (loss) before income
  taxes (benefit)                           (227,083)          41,303

Income taxes (benefit)                       (81,120)          12,582
                                         -----------       -----------
NET INCOME (LOSS)                        $  (145,963)      $   28,721
                                         ===========       ===========

Basic earnings (loss) per share          $     (0.72)       $     0.13

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

Dilutive earnings (loss) per share       $     (0.72)       $     0.13
                                         ===========       ===========

See accompanying notes to the unaudited consolidated financial statements.

4

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

                                               Three Months Ended
                                                    June 30,
                                         -----------       -----------
                                              2000             1999
                                         -----------       -----------
INTEREST AND DIVIDEND INCOME
   Loans receivable                      $   435,246       $   351,673
   Investment securities
       Taxable                                43,243            54,568
       Exempt from federal
         income tax                            1,123             2,853
   Interest - bearing deposits
     in other banks                            5,203             8,801
   Mortgage - backed securities               22,964            28,087
   Dividends on Federal Home
     Loan Bank Stock                           7,922             5,780
                                         -----------       -----------
        Total interest and
          dividend income                    515,701           451,762
                                         -----------       -----------
INTEREST EXPENSE
   Deposits                                  181,518           159,486
   Borrowings                                120,423            80,397
                                         -----------       -----------
           Total interest expense            301,941           239,883
                                         -----------       -----------
NET INTEREST INCOME                          213,760           211,879

Provision for loan losses                     32,450            14,427
                                         -----------       -----------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                 181,310           197,452
                                         -----------       -----------
NONINTEREST INCOME
   Service fees                               28,877            22,301
   Loss on sale of investment
     securities                             (289,223)          (28,906)
   Other income                                1,687            22,535
                                         -----------       -----------
           Total noninterest income         (258,659)           15,930
                                         -----------       -----------
NONINTEREST EXPENSE
   Compensation and employee benefits         83,332            84,686
   Occupancy and equipment                    11,073            10,751
   Data processing charges                    16,697            20,066
   Other expense                              84,264            69,533
                                         -----------       -----------
           Total noninterest expense         195,366           185,036

                                         -----------       -----------
Income (loss) before income
  taxes (benefit)                           (272,715)           28,346

Income taxes (benefit)                       (98,119)           11,916
                                         -----------       -----------
NET INCOME (LOSS)                        $  (174,596)      $    16,430
                                         ===========       ===========

Basic earnings (loss) per share          $     (0.83)      $      0.08
                                         ===========       ===========

Dilutive earnings (loss) per share       $     (0.83)      $      0.08
                                         ===========       ===========

See accompanying notes to the unaudited consolidated financial statements.

5
<PAGE>
<TABLE>
<CAPTION>
                         CARNEGIE FINANCIAL CORPORATION
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY


                                                                                  Accumulated                 Total         Compre-
                              Additional                  Unearned     Unearned     Other                     Stock-        hensive
                      Common    Paid-in      Retained       ESOP         RSP     Comprehensive   Treasury     holders       Income
                      Stock     Capital      Earnings      Shares       Shares   Income (loss)    Stock       Equity        (Loss)
                     --------  ----------   ----------   ----------   ---------- -------------- ----------  ----------    ----------
<S>                  <C>      <C>         <C>          <C>          <C>          <C>          <C>
Balance,
  December 31, 1999   $23,805  $2,062,493   $1,203,806  $  (161,874) $   (64,750)  $ (241,366)  $ (129,506) $2,692,608

Net loss                                      (145,963)                                                       (145,963)   $(145,963)
Other comprehensive
income:  Unrealized
  gain on available
  for sale
  securities, net
  of taxes of
  $62,764                                                                             121,835                  121,835      121,835
                                                                                                                           --------
Comprehensive
income                                                                                                                   $  (24,127)
                                                                                                                          =========
RSP Shares earned                                                          8,094                                 8,094
ESOP Shares earned                 (2,062)                    9,522                                              7,460
                     -------    ---------    ---------    ---------   ----------    ---------    ---------   ---------

Balance,
  June 30, 2000      $23,805   $2,060,431   $1,057,843  $  (152,352) $   (56,656)  $ (119,531)  $ (129,506) $2,684,035
                     =======    =========    =========    =========   ==========    =========    =========   =========


Components of
  comprehensive
  income:
  Change in net
  unrealized
  gain on
  investment
  securities
  held for sale                                                                                  $ (65,333)
Realized losses
  included in
  net loss, net
  of taxes of
  $96,420                                                                                          187,168
                                                                                                 ----------
Total                                                                                            $ 121,835
                                                                                                 ==========
</TABLE>

See accompanying notes to the unaudited consolidated financial statements.

6


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

                                                       Six Months Ended
                                                            June 30,
                                                      2000           1999
                                                  -----------    ---------
OPERATING ACTIVITIES
Net income (loss)                                 $  (145,963) $   28,721
Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
    Depreciation, amortization and
       accretion, net                                 (14,884)     48,505
    Provision for loan losses                          52,414      38,448
    Amortization of unearned ESOP and RSP              17,616      17,616
    Loss on sale of securities                        283,588      27,739
    Decrease (increase) in accrued
       interest receivable                             41,556     (63,370)
    Increase in accrued interest payable               63,000     189,678
    Other, net                                       (194,883)    (37,233)
                                                   ----------   ----------
    Net cash provided by operating activities         102,444     250,104
                                                   ----------   ----------
INVESTING ACTIVITIES

Investment securities available for sale:
    Purchases                                        (491,688)  (2,746,119)
    Proceeds from sales                             2,465,224      707,194
Mortgage-backed securities available for sale:
    Purchases                                               -     (111,463)
    Maturities and repayments                          37,203      245,491
Mortgage-backed securities held to maturity:
    Maturities and repayments                          57,640      195,299
Net increase in loans                                 (41,176)  (4,358,816)
Sales (purchases) of Federal Home Loan Bank stock     242,100     (305,700)
Purchases of office properties and equipment          (18,170)      (4,163)
                                                   ----------   ----------
Net cash provided by (used for)
    investing activities                            2,251,133   (6,378,277)
                                                   ----------   ----------
FINANCING ACTIVITIES
Net increase in deposits                              632,870      137,244
Proceeds from borrowed funds                        2,000,000    5,750,000
Payments of borrowed funds                         (5,082,500)           -
Purchase of treasury stock                                  -     (118,530)
Purchase stock for RSP                                      -      (88,079)
Net change in advances for taxes and insurance         75,761       98,641
                                                   ----------   ----------
Net cash provided by (used for)
    financing activities                           (2,373,869)   5,779,276
                                                   ----------   ----------
Decrease in cash and cash equivalents                 (20,292)    (348,897)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD      790,785    1,164,488
                                                   ----------   ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $   770,493  $   815,591
                                                   ----------   ----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for:
  Interest on deposits and borrowings             $   255,266  $   266,824
  Income taxes                                         65,000        4,425

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 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 period.  The weighted  number of shares  outstanding for the
six-month  period  ended  June  30,  2000  and 1999  was  202,072  and  214,497,
respectively.  The weighted  number of shares  outstanding  for the three- month
period ended June 30, 2000 and 1999 was 202,385 and 210,027, respectively.

The Company provides dual  presentation of Basic and Diluted earnings per share.
Basic  earnings per share  utilizes net income as reported as the  numerator and
the actual average shares  outstanding as the denominator.  Diluted earnings per
share  includes  any  dilutive  effects of options,  warrants,  and  convertible
securities.  At June 30,  2000 and 1999  there were no  dilutive  effects on the
computation.

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,  general economic
conditions,  government  policies  and actions of  regulatory  authorities.  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.

Carnegie   Financial   Corporation  is  a  savings  and  loan  holding   company
headquartered  in  Carnegie,  Pennsylvania,  which  provides  a broad  range  of
fdeposits  and loan  products  through  its wholly  owned  subsidiary,  Carnegie
Savings Bank (collectively, the "Company").

Overview

     In conjunction  with a routine  regulatory  examination of Carnegie Savings
Bank (the  "Bank")  by the Office of Thrift  Supervision  (the  "OTS"),  the OTS
requested the Bank to enter into a Supervisory Agreement (the "Agreement").  The
Agreement was signed on April 14, 2000, (the "Effective  Date") and will,  among
other things, place restrictions on the Bank's growth. Under the Agreement,  the
Bank may not increase its assets in an amount exceeding net interest credited on
deposit liabilities (or earnings credited on share accounts) during any calendar
quarter, without prior written approval of the regional director of the OTS (the
"Regional Director"). Additionally, the Agreement requires the Bank or its Board
of  Directors  to  revise  various  policies  including  1)  interest  rate risk
management, 2) strategic planning to improve earnings, 3) loan documentation and
underwriting policies, and 4) internal loan and asset classifications  policies.
The restrictions on the Bank's operations are immediately effective. On June 25,
2000, the Bank submitted to the OTS among other things,  a revised business plan
and on August 1, 2000 the interest rate risk policy was  submitted.  The Bank is
currently  working  with the OTS to resolve such  matters.  The  Agreement  will
remain in place  until  terminated  by the OTS and could  adversely  affect  the
financial conditions, liquidity, and operations of the Company.

Asset/Liability Management

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

     The board of directors  attempts to manage the interest rate sensitivity of
the Company  through its asset and liability  committee that is comprised of the
board of directors.  The board of directors  meets  quarterly with management to
monitor the impact of interest  rate risk and develops  strategies to manage its
liquidity,  shorten the effective  maturities of certain interest earning assets
and increase the  effective  maturities  of certain  liabilities,  to reduce the
exposure to interest rate  fluctuations.  The Agreement  with the OTS identifies
the Bank's  interest rate levels as  unacceptably  high and requires the Bank to
develop and pursue  strategies  to reduce  interest-rate  risk.  The  strategies
considered  include methods to extend the terms of the Company's  borrowings and
shorten the terms of the Company's  assets.  Although this is expected to reduce
the  Bank's  interest  rate  risk in the  short

9
<PAGE>


term, it may also affect the Company's current income.  However, in implementing
these  strategies  the board of  directors  will  attempt to balance the need to
improve its interest rate risk against the impact such  restructurings will have
on profitability.

     On May 25, 2000, the Board adopted a revised  interest rate risk policy and
also took certain  actions to implement  this policy.  Accordingly,  the Company
sold $2.7 million of its  available for sale  securities  and incurred a pre-tax
loss of approximately  $272,000.  With the proceeds of such securities sales and
the extension of borrowings of $2 million, the Company paid down $4.3 million of
its  short-term  borrowings.  Although  this  strategy is expected to reduce the
Bank's  interest  rate risk in the short term,  there is no  assurance  that any
additional  restructurings  in compliance  with the  Agreement  will not further
adversely affect the Company's current income. In implementing  these strategies
the board of directors  will attempt to balance the need to improve its interest
rate risk against the impact such restructurings will have on profitability.


Net Portfolio Value

     The OTS computes  amounts by which the net present  value of cash flow from
assets, liabilities and off balance sheet items ("net portfolio value" or "NPV")
would  change  in the event of a range of  assumed  changes  in market  interest
rates.  The Interest Rate  Sensitivity  of Net Portfolio  Value Report shows the
degree to which balance sheet line items and net portfolio value are potentially
affected by a 100 to 300 basis point (1/100th of a percentage  point) upward and
downward parallel shift (shock) in the Treasury yield curve.

     The following  table  presents the Company's NPV at June 30, 2000.  The NPV
was calculated by the OTS based upon information provided by the Company.

                    Percentage Change in Net Portfolio Value
                    ----------------------------------------
                      Changes
                     in Market                            Change in NPV
                  Interest Rates          NPV Ratio(1)       Ratio(2)
                  --------------          ------------       --------
                  (basis points)

                     + 300                    3.20%          (689) bp
                     + 200                    5.48           (461) bp
                     + 100                    7.83           (226) bp
                         0                   10.09             --
                     - 100                   11.95            185 bp
                     - 200                   12.52            243 bp
                     - 300                   12.41            232 bp

------------------
(1)  Calculated as the estimated NPV divided by present value of total assets.

(2)  Calculated  as the  excess  (deficiency)  of the  NPV  ratio  assuming  the
     indicated change in interest rates over the estimated NPV ratio assuming no
     change in interest rates.

     The  calculations  in the above table indicate that the Company's NPV would
be significantly adversely affected by increases in interest rates and favorably
affected by decreases in interest rates.  Computations of

10
<PAGE>

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

Results of Operations

     For the  current six month and three month  periods,  net income  decreased
$175,000 and  $191,000,  respectively  to a net loss of $146,000  and  $175,000,
respectively,  from net income of $29,000 and $16,000 for the same periods ended
1999. In response to the Agreement, management and the board of directors sought
to reduce the  exposure to interest  rate  fluctuations  by divesting of certain
U.S.  Government Agency and municipal  securities totaling $2,645,000 during the
past quarter.  Although  this resulted in a loss on the sale of such  securities
totaling  $272,000  for the  quarter,  the  Company  was able to  repay  certain
short-term  borrowings  and  improved  its  interest  rate risk  position in the
current term. For details of the Company's results of operations for the current
six month and three month periods, see "Average Balance Sheets".

Average Balance Sheets

     The  following  table  sets  forth  certain  information  relating  to  the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods presented.  Average balances are derived from daily balances.  The table
illustrates  that the increase in the amount and cost of funds of average  other
liabilities,  which  consists  of FHLB  advances,  has  adversely  affected  the
interest rate spread for the current six months and three month periods and will
continue to do so in future periods.

11
<PAGE>
<TABLE>
<CAPTION>
                                                                             Six Months ended June 30
                                                  ----------------------------------------------------------------------------------
                                                                   2000                                     1999
                                                  ---------------------------------------     --------------------------------------
                                                                             (Dollars in thousands)

                                                    Average                      Average      Average                     Average
                                                    balance      Interest      Yield/Cost     Balance      Interest      Yield/Cost
                                                    -------      --------      ----------     -------      --------      ----------
<S>                                                <C>           <C>            <C>         <C>            <C>             <C>
Interest-earning assets:
 Loans receivable(1)                                $22,816       $  866           7.59%      $16,817        $ 653           7.77%
 Investment securities                                2,965          110           7.42%        3,274           99           6.05%
 Mortgage-backed securities                           1,409           46           6.53%        1,937           61           6.30%
 Other interest-earning assets(2)                       963           27           5.61%        1,595           42           5.27%
                                                    -------        -----                      -------         ----
  Total interest-earning assets                      28,153        1,049           7.45%       23,623          855           7.24%
                                                                   -----                                      ----
Non-interest-earning assets                             615                                       143
                                                    -------                                   -------
  Total assets                                      $28,768                                   $23,766
                                                    =======                                   =======

Interest-bearing liabilities:
 NOW accounts                                       $ 1,439           14           1.95%       $1,414           14           1.98%
 Savings accounts                                     3,962           51           2.57%        3,678           43           2.34%
 Certificates of deposit                             10,684          294           5.50%        9,752          271           5.56%
 Other liabilities                                    8,530          253           5.93%        5,724          129           4.51%
                                                     ------        -----                       ------         ----
  Total interest-bearing liabilities                 24,615          612           4.97%       20,568          457           4.44%
                                                     ------        -----                       ------         ----
Non-interest bearing liabilities:

 Other liabilities                                    1,448                                       290
                                                     ------                                    ------
 Total liabilities                                   26,063                                    20,858
                                                     ------                                    ------

Stockholders' equity                                  2,705                                     2,908
                                                      -----                                     -----

 Total liabilities and stockholders' equity         $28,768                                   $23,766
                                                     ======                                    ======

Net interest income                                                $ 437                                      $398
                                                                    ====                                       ===

Interest rate spread(3)                                                            2.48%                                     2.80%
                                                                                   ====                                      ====

Net yield on interest-earning assets(4)                                            3.10%                                     3.37%
                                                                                   ====                                      ====

Ratio of average interest-earning assets to
average interest-bearing liabilities                                             114.37%                                   114.85%
                                                                                 ======                                    ======
</TABLE>

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

12
<PAGE>
<TABLE>
<CAPTION>
                                                                         Three Months ended June 30
                                                    --------------------------------------------------------------------------------
                                                                2000                                         1999
                                                    -----------------------------------    -----------------------------------------
                                                                               (Dollars in thousands)
                                                    Average                       Average       Average                   Average
                                                    balance     Interest        Yield/Cost      Balance     Interest     Yield/Cost
                                                    -------     --------        ----------      -------     --------     ----------
<S>                                                <C>            <C>             <C>        <C>            <C>             <C>
Interest-earning assets:
 Loans receivable(1)                                $22,823        $ 435           7.62%      $18,108        $ 352           7.78%
 Mortgage-backed securities                           1,368           23           6.73%        1,869           28           5.99%
 Investment securities                                2,595           44           6.78%        3,854           57           5.92%
 Other interest-earning assets(2)                       912           13           5.70%        1,022           15           5.87%
                                                     ------        -----                       ------         ----
  Total interest-earning assets                      27,698          515           7.44%       24,853          452           7.27%
                                                                   -----                                      ----
Non-interest-earning assets                             714                                       752
                                                     ------                                    ------
  Total assets                                      $28,412                                   $25,605
                                                    =======                                   =======

Interest-bearing liabilities:
 NOW accounts                                       $ 1,427            7           1.96%       $1,365            7           2.05%
 Savings accounts                                     4,077           26           2.55%        3,652           20           2.19%
 Certificates of deposit                             10,669          148           5.50%        9,704          133           5.44%
 Other liabilities                                    7,865          120           6.10%        6,418           80           4.99%
                                                    -------        -----                      -------         ----
  Total interest-bearing liabilities                 24,038          301           5.01%       21,139          240           4.52%
                                                    -------        -----                      -------         ----
Non-interest bearing liabilities:
 Other liabilities                                    1,658                                     1,622
                                                    -------                                   -------
 Total liabilities                                   25,696                                    22,761
                                                    -------                                   -------
Stockholders' equity                                  2,716                                     2,844
                                                    -------                                   -------
 Total liabilities and stockholders' equity         $28,412                                   $25,605
                                                    =======                                   =======

Net interest income                                                $ 214                                      $212
                                                                   =====                                      ====
Interest rate spread(3)                                                            2.43%                                     2.75%
                                                                                   ====                                      ====
Net yield on interest-earning assets(4)                                            3.09%                                     3.43%
                                                                                   ====                                      ====
Ratio of average interest-earning assets to
  average interest-bearing liabilities                                           115.23%                                   117.57%
                                                                                 ======                                    ======

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

13
<PAGE>

     Rate/Volume Table

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

                     For the Six-Months Ended June 30, 2000
                     --------------------------------------

                                                  Volume       Rate       Total
                                                  ------       ----       -----
                                                         (In Thousands)
Interest income:
Loans receivable                                  $ 233       $ (20)      $ 213
Mortgage-backed securities                          (10)         21          11
Investment securities                               (17)          2         (15)
Other interest-earning assets                       (17)          2         (15)
                                                  -----       -----       -----
  Total interest-earning assets                   $ 189       $   5       $ 194
                                                  =====       =====       =====


 NOW accounts                                     $  --       $  --       $  --
 Savings deposits                                     4           5           9
 Certificates of deposit                             26          (3)         23
 Other interest-bearing liabilities                  63          61         124
                                                  -----       -----       -----

  Total interest-bearing liabilities              $  93       $  63       $ 156
                                                  =====       =====       =====

Change in net interest income                     $  96       $ (58)      $  38
                                                  =====       =====       =====


                    For the Three-Months Ended June 30, 2000
                    ----------------------------------------

                                                    Volume      Rate       Total
                                                    ------      ----       -----
                                                           (In Thousands)
Interest income:
Loans receivable                                     $ 92       $ (9)      $ 83
Mortgage-backed securities                             (8)         3         (5)
Investment securities                                 (19)         6        (13)
Other interest-earning assets                          (2)       --          (2)
                                                     ----       ----       ----
  Total interest-earning assets                      $ 63       $--        $ 63
                                                     ====       ====       ====

 NOW accounts                                        $ --       $ --       $ --
 Savings deposits                                      13          3         16
 Certificates of deposit                                2          3          5
 Other interest-bearing liabilities                    18         22         40
                                                     ----       ----       ----
  Total interest-bearing liabilities                 $ 33       $ 28       $ 61
                                                     ====       ====       ====

Change in net interest income                        $ 30       $(28)      $  2
                                                     ====       ====       ====

14
<PAGE>


         The provision for loan losses for the six-month and three-month periods
ended June 30, 2000 totaled  $52,000 and $32,000,  respectively,  as compared to
$38,000 and $14,000,  respectively for the same period ended in 1999. During the
first half of 2000, the Company incurred loan charge-offs approximating $72,000.
Such charge-offs  primarily  consisted of three installment loans related to the
same borrowing  relationship.  Management  continually evaluates the adequacy of
the   allowance   for  loan   losses,   which   encompasses   the  overall  risk
characteristics of the various portfolio segments,  past experience with losses,
the impact of economic  conditions on borrowers and other relevant factors which
may come to the  attention of  management.  Although the Company  maintains  its
allowance for loan losses at a level that it considers to be adequate to provide
for the inherent risk of loss in its loan  portfolio,  there can be no assurance
that  future  losses  will  not  exceed  estimated  amounts  or that  additional
provisions  for loan losses will not be  required in future  periods.  See "Risk
Elements".

         Noninterest  income,  which is comprised of service  charges on deposit
accounts,  gains and losses on sales of securities,  and other income  decreased
$282,000 and $275,000 for the six-month and  three-month  periods ended June 30,
2000,  respectively,  as compared to the same  periods  ended in 1999.  As noted
above,  management's  efforts to reduce interest rate exposure through the sales
of certain  investment  securities  primarily  accounted  for this  fluctuation.
However,  also  contributing to this decline was a decrease in loan originations
for the current six month and three month  periods that resulted in a decline in
fee income of $35,000  and  $21,000,  respectively.  Due to the  Agreement,  the
Company growth is restricted.

Liquidity and Capital Resources

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

         Management  monitors both the Company's and the Bank's total risk-based
Tier I  risk-based  and Tier I  leverage  capital  ratios  in  order  to  assess
compliance  with regulatory  guidelines.  At June 30, 2000, both the Company and
the  Bank  exceeded  the  minimum   risk-based   and  leverage   capital  ratios
requirements.  At June 30, 2000, the Company's and Bank's total risk-based, Tier
I risk-based and Tier I leverage  ratios were 19.7%,  18.4%,  10.0%,  and 19.3%,
18.1%, 9.8%, respectively. The capital ratios for the Company and the Bank could
be adversely affected due to the Agreement.




15
<PAGE>



Risk Elements

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.

                                                       June 30,  December 31,
                                                         2000         1999
                                                      ---------  -----------
                                                     (Dollars in thousands)

Loans on nonaccrual basis                             $    26    $      50
Loans past due 90 days or more and still accruing          --           --

Total nonperforming loans                                  26           50

Real estate owned                                          --           --

Total nonperforming assets                                 26           50

Nonperforming loans as a percent of total loans          0.11%        0.22%

Nonperforming assets as a percent of total assets        0.10%        0.17%

Allowance for loan losses to nonperforming loans       708.97%      407.30%

Management  monitors  impaired loans on a continual  basis. As of June 30, 2000,
impaired  loans had no material  effect on the Company's  financial  position or
results of operations.

Management  believes the level of the allowance for loan losses at June 30, 2000
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.


16
<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

               The following  represents  the results of matters  submitted to a
               vote of the sharesholders at the annual meeting held on April 27,
               2000:

               Election of a Director for term to expire in 2004:
               Shirley C. Chiesa  was elected  by the following vote::

               For:                          176,543
               Votes Withheld:                13,850

               Ratification  of the Carnegie  Financial  Corporation  1999 Stock
               Option Plan, by the following votes:

               For:                          108,224
               Against:                       18,250
               Votes Abstaining:               8,600

               Ratification of the Carnegie Savings Bank Restricted  Stock  Plan
               by the following votes:

               For:                          100,484
               Against:                       20,940
               Votes Abstaining:               8,600

               S.R. Snodgrass A.C.was selected as the Company's independent
               auditors for the fiscal year 2000 by the following vote:

               For:                          180,443
               Against:                        5,400
               Votes Abstaining:               7,550

ITEM 5.  Other Information

         None



17
<PAGE>

ITEM 6.  Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
         (a)  The following exhibits are incorporated as part of this report
               <S>       <C>
                   3(i)    Articles of Incorporation of Carnegie Financial Corporation *
                   3(ii)   Bylaws of Carnegie Financial Corporation *
                   4       Specimen Stock Certificate *
                  10.1     Employment Agreement between the Bank and Shirley Chiesa *
                  10.2     Supplemental Executive Retirement Plan *
                  10.3     Form of Directors Consultation and Retirement Plan between the Bank and
                           each of the directors *
                  10.4     Carnegie Financial Corporation 1999 Stock Plan **
                  10.5     Carnegie Savings Bank Restricted Stock Plan **
                  27       Financial Data Schedule (electronic filing only)
                  99       Review Report of S.R. Snodgrass, A.C.
</TABLE>

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

     (b) Reports on Form 8-K

         On April 14, 2000, the Company filed an Item 5 Form 8-K which disclosed
that the Bank entered  into a  Supervisory  Agreement  with the Office of Thrift
Supervision. Additionally, on June 8, 2000, the Company filed an Item 5 Form 8-K
which disclosed the effects of the  implementation  of the revised interest rate
risk policy in  accordance  with the  Supervisory  Agreement  with the Office of
Thrift Supervision.

18
<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:  August 11, 2000             By:     /s/Shirley C. Chiesa
                                           -------------------------------------
                                           Shirley C. Chiesa
                                           President and Chief Executive Officer


Date:  August 11, 2000             By:     /s/Joseph Pigoni
                                           -------------------------------------
                                           Joseph Pigoni
                                           Vice President and CFO