EXHIBIT 13

<PAGE>


                         CARNEGIE FINANCIAL CORPORATION

Corporate Profile

         Carnegie   Financial   Corporation    ("Carnegie"),    a   Pennsylvania
corporation,  is the savings and loan holding company for Carnegie  Savings Bank
("Carnegie  Savings").  Carnegie  conducts  no  business  of its own other  than
holding all of the outstanding stock of Carnegie Savings.

         Carnegie   Savings  is  a  federally   chartered   stock  savings  bank
headquartered in Carnegie,  Pennsylvania and conducts  business through its full
service  branch  located in the  community of Carnegie,  Pennsylvania.  Carnegie
Savings  offers a broad range of  deposits  and loan  products  to  individuals,
families,  and small businesses.  Carnegie Savings is subject to examination and
regulation by the Office of Thrift  Supervision  and its deposits are insured by
the Bank Insurance Fund of the FDIC to applicable limits.

Stock Market Information

         Carnegie's common stock has been traded on the OTC Electronic  Bulletin
Board under the trading symbol of "CAFN".  The following table reflects high and
low bid quotations.  The quotations reflect inter-dealer prices,  without retail
mark-up, mark-down, or commission, and may not represent actual transactions.

                                                                    Dividends
           Date                              High ($)     Low ($)   Declared ($)
           ----                              --------     -------   ------------
January 1, 1999 to March 31, 1999              8.50        7.50          --
April 1, 1999 to June 30, 1999                10.25        9.00          --
July 1, 1999 to September 30, 1999             9.25        7.50          --
October 1, 1999 to December 31, 1999           9.00        7.50         .10
January 1, 2000 to March 31, 2000              8.50        7.63          --
April 1, 2000 to June 30, 2000                 8.00        6.50          --
July 1, 2000 to September 30, 2000             7.50        6.00          --
October 1, 2000 to December 31, 2000           7.50        5.75          --

         The number of  shareholders  of record of common stock as of the record
date of March 1, 2001, was  approximately  169. This does not reflect the number
of persons or  entities  who held stock in  nominee  or  "street"  name  through
various   brokerage   firms.  At  March  1,  2001,  there  were  224,776  shares
outstanding.  Carnegie's  ability to pay dividends to  stockholders is generally
dependent upon the dividends it receives from Carnegie Savings. Carnegie Savings
may not declare or pay a cash  dividend on any of its stock if the effect  would
cause its regulatory capital to be reduced below (1) the amount required for its
liquidation  account  established in connection with its stock conversion or the
regulatory capital requirements imposed by the Office of Thrift Supervision.

                                       2

<PAGE>

Selected Financial Information

                                                             At or for the
                                                       Years Ended December 31,
                                                       ------------------------
                                                        (Dollars in thousands,
                                                        except selected ratios)
                                                          2000           1999
                                                      ----------     ----------
Selected Balance Sheet Data:
Assets ............................................   $   26,738     $   29,489
Loans receivable (net) ............................       22,385         22,518
Deposits ..........................................       17,498         16,552
Shareholders' equity ..............................        2,790          2,693
Selected Results of Operations:
Interest income ...................................   $    2,016     $    1,865
Interest expense ..................................        1,186          1,010
Net interest income ...............................          830            855
Net (loss) income .................................         (108)           108
Earnings (loss) per share
    Basic .........................................         (.53)           .47
    Diluted .......................................         (.53)           .46
Selected Ratios:
Net interest rate spread ..........................         2.31%          2.69%
Net yield on average interest- earning assets .....         3.04           3.35
Return on average assets ..........................         (.39)           .42
Return on average equity ..........................        (3.94)          4.86
Non-performing loans to total assets ..............          .27            .22
Allowance for loan loss to non-performing loans ...       278.48         408.00


                                       3

<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,  year 2000 issues,
general  economic  conditions,  government  policies  and actions of  regulatory
authorities.  Carnegie  Financial  Corporation  (the  "Company")  undertakes  no
obligation  to publicly  release the results of any  revisions to those  forward
looking  statements which may be made to reflect events or  circumstances  after
the date hereof or to reflect the occurrence of unanticipated events.

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

Overview

         In conjunction with a routine regulatory examination of 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  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.
Additionally,  the  Agreement  required  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  Agreement  will
remain in place  until  terminated  by the OTS and could  adversely  affect  the
financial conditions, liquidity, and operations of the Company.

         In  connection  with the  Agreement,  in order to reduce  interest rate
risk,  during the second quarter of fiscal 2000, the Company  extended the terms
of certain  borrowings  and used the  proceeds  from the sale of $2.7 million of
available for sale  securities  and the  extension of certain  borrowings to pay
down $4.3 million of higher cost borrowings.  Accordingly, at December 31, 2000,
assets  decreased  $2.8 million to $26.7  million from $29.5 million at December
31, 1999 and  liabilities  decreased  $2.9  million to $23.9  million from $26.8
million at December 31, 1999.

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 which 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
identified  and  required  the Bank to develop and pursue  strategies  to reduce
interest-rate risk. See "Overview".

                                       4
<PAGE>

Net Portfolio Value

         The Bank  computes  amounts by which the net present value of cash flow
from assets,  liabilities and off balance sheet items ("net portfolio  value" or
"NPV")  would  change  in the  event of a range of  assumed  changes  in  market
interest  rates.  Based upon OTS  assumptions,  the following table presents the
Bank's  percentage change in NPV, assuming an immediate change in interest rates
of plus or minus 200 basis points from the level at December 31, 2000.


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

           + 300                      4.60%           (630) bp
           + 200(1)                   6.84            (406) bp
           + 100                      9.02            (188) bp
               0                     10.90              --
           - 100                     11.85              95  bp
           - 200                     11.42              52  bp
           - 300                     10.95               5  bp

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

         The  calculations  in the above table  indicate  that the Company's NPV
could be  significantly  affected by increases in interest  rates and  favorably
affected by decreases in interest rates.  Computations of prospective effects of
hypothetical interest rate changes are based on numerous assumptions,  including
relative levels of market interest rates,  prepayments and deposit  run-offs and
should not be relied upon as indicative of actual results.  Certain shortcomings
are inherent in such  computations.  Although certain assets and liabilities may
have similar  maturity or periods of repricing they may react at different times
and in different  degrees to changes in the market interest rates.  The interest
rates on certain  types of assets and  liabilities  may  fluctuate in advance of
changes  in market  interest  rates,  while  rates on other  types of assets and
liabilities  may lag behind changes in market  interest  rates.  Certain assets,
such as  adjustable  rate  mortgages,  generally  have features  which  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.

                                       5
<PAGE>

Results of Operations

         Net income decreased  $216,000  resulting in a net loss of $108,000 for
the year ended December 31, 2000 from net income of $108,000 for the same period
ended 1999.  This  decrease was  primarily  due to an after tax loss of $195,000
from the sale of securities available for sale in the second quarter of 2000, in
connection with the Agreement.

         Net interest  income  before the  provision  for loan losses  decreased
$25,000 to  $830,000 for the year ended  December 31, 2000 from $855,000 for the
same period in 1999. The decrease in net interest  income was primarily  related
to a 10 basis  point  decline  in the  average  yield  earned on  average  loans
receivable  and an 45 basis  point  increase  in the  average  cost of  interest
earning liabilities.  Though average loan receivables  increased $3.5 million to
$22.6  million  from last year,  such  increase  was not enough to overcome  the
increase  in average  cost of funds  coupled  with a $1.5  million  increase  in
average interest earning liabilities during fiscal 2000. The increase in average
cost of funds  primarily  caused  the  interest  rate  margin for the year ended
December  31,  2000 to decline 38 basis  points to 2.31% from 2.69% for the year
ended December 31, 1999. See " -- Average Balance Sheet and Rate Volume Table."

                                       6
<PAGE>

Average Balance Sheet

         The  following  table sets forth  certain  information  relating to the
Company's  average  balance  sheet and reflects the average  yield on assets and
average cost of  liabilities  for the periods  indicated and the average  yields
earned and rates paid.  Such yields and costs are derived by dividing  income or
expense by the average balance of assets or liabilities,  respectively,  for the
periods presented.  Average balances are derived from daily balances.  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 year ended December 31, 2000.


<TABLE>
<CAPTION>
                                                                                Year ended December 31,
                                                  ----------------------------------------------------------------------------------
                                                                        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)............................      $22,648        $1,720         7.59%      $19,068       $1,467          7.69%
 Mortgage-backed securities.....................        1,348            91         6.75%        1,789          105          5.87%
 Investment securities..........................        2,734           185         6.77%        3,786          254          6.71%
 Other interest-earning assets(2)...............          538            20         3.72%          847           39          4.60%
                                                      -------        ------                    -------       ------
  Total interest-earning assets.................       27,268         2,016         7.39%       25,490        1,865          7.32%
                                                                     ------                                  ------
Non-interest-earning assets.....................          238                                      471
                                                      -------                                  -------
  Total assets..................................      $27,506                                  $25,961
                                                      =======                                  =======
Interest-bearing liabilities:
 NOW accounts...................................      $ 1,466            29         1.98%       $1,491           29          1.95%
 Savings accounts...............................        4,100           124         3.02%        3,694           90          2.44%
 Certificates of deposit........................       10,628           596         5.61%        9,573          519          5.42%
 Other liabilities (3)..........................        7,138           437         6.12%        7,071          372          5.26%
                                                      -------        ------                    -------       ------
  Total interest-bearing liabilities...........        23,332         1,186         5.08%       21,829        1,010          4.63%
                                                      -------        ------                    -------       ------
Non-interest bearing liabilities:...............
 Other liabilities..............................        1,436                                    1,909
                                                      -------                                  -------
 Total liabilities..............................       24,768                                   23,738
                                                      -------                                  -------
Stockholders' equity............................        2,738                                    2,223
                                                      -------                                  -------
 Total liabilities and stockholders' equity.....      $27,506                                  $25,961
                                                      =======                                  =======
Net interest income.............................                     $  830                                  $  855
                                                                     ======                                  ======
Interest rate spread(4).........................                                    2.31%                                    2.69%
                                                                                    ====                                     ====
Net yield on interest-earning assets(5).........                                    3.04%                                    3.35%
                                                                                    ====                                     ====
Ratio of average interest-earning assets to
  average interest-bearing liabilities..........                                  116.87%                                  116.77%
                                                                                  ======                                   ======
</TABLE>

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

                                       7
<PAGE>

Rate/Volume Table

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


                                                     Year ended December 31,
                                                  ------------------------------
                                                         2000 vs. 1999
                                                  ------------------------------
                                                       Increase (Decrease)
                                                              Due to
                                                  ------------------------------
                                                  Volume       Rate       Total
                                                  ------      ------      ------
                                                         (In Thousands)
Interest income:
Loans receivable ...........................      $ 273       $ (20)      $ 253
Mortgage-backed securities .................        (36)         22         (14)
Investment securities ......................        (71)          2         (69)
Other interest-earning assets ..............        (11)         (8)        (19)
                                                  -----       -----       -----
  Total interest-earning assets ............      $ 155       $  (4)      $ 151
                                                  =====       =====       =====
Interest expense:
 NOW accounts ..............................      $  --       $  --       $  --
 Savings deposits ..........................         11          23          34
 Certificates of deposit ...................         59          18          77
 Other interest-bearing liabilities ........          4          61          65
                                                  -----       -----       -----
  Total interest-bearing liabilities .......      $  74       $ 102       $ 176
                                                  =====       =====       =====

Change in net interest income ..............      $  81       $(106)      $ (25)
                                                  =====       =====       =====

         Noninterest  income,  which is comprised of service  charges on deposit
accounts,  net  investment  securities  losses,  net and other income  decreased
$267,000 for the year ended  December 31, 2000,  from $114,000 for the same 1999
period. Service charges on deposit accounts increased a modest $11,000 due to an
increased  level  of  transaction  account  activity.  Additionally,  due to the
restriction on the Bank's growth in connection with the Agreement,  other income
which includes fees associated with loan  underwriting  and processing  declined
$36,000 to $13,000 for the year ended  December  31,  2000 from  $49,000 for the
same period in fiscal 1999.  This factor,  coupled with net losses on securities
divested  amounting to $242,000 resulted in the reduction in noninterest  income
for 2000.

Noninterest  expense  increased  $24,000 to $776,000 for the year ended December
31, 2000 from $752,000 for the same period ended 1999. The most significant item
affecting noninterest expense was a $23,000 increase in professional fees. These
fees  were  incurred  for  legal  and  consulting  services  rendered  to ensure
compliance with the Agreement.

                                       8
<PAGE>

Income  taxes  decreased  $104,000  for the year ended  December  31,  2000 to a
benefit  of  $61,000 as  compared  to an  expense of $43,000  for the year ended
December 31,  1999.  This  decrease is due to the pre-tax  loss  position of the
Company at December 31, 2000.

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.  In addition  to the  Company's  ability to generate
funds from new deposits and  principal  reductions  and  repayments of loans and
mortgage-backed  securities,  the Company  has the ability to borrow  additional
funds from the FHLB of approximately $12.2 million at December 31, 2000.

         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 December 31, 2000, both the Company
and the Bank  exceeded  the  minimum  risk-based  and  leverage  capital  ratios
requirements.  See  "Note  14 to the  Consolidated  Financial  Statements."  The
capital  ratios for the Company and the Bank could be adversely  affected due to
the Agreement.

         Net cash  provided by operating  activities  (i.e.,  the net effects of
transactions  that enter  into the  determination  of net  income  (loss) - e.g.
non-cash  items,  amortization  and  depreciation,   loss  (gain)  on  sales  of
securities  available for sale and provision for loan losses] for the year ended
December 31, 2000 decreased $226,000 to $40,000 from $266,000 for the year ended
December 31, 1999.  Such  decrease in fiscal 2000  primarily  relates to the net
loss on the sale of securities available for sale.

         Net  cash  provided  by  investing  activities  (i.e.,  cash  receipts,
primarily  from  our  investment   securities  and  mortgage-backed   securities
portfolios  and our loan  portfolio)  increased by $12.6 million to $2.8 million
for the year ended December 31, 2000 from cash used for investing activities use
position of $9.8 million for the year ended  December  31, 1999.  In response to
the Agreement, this increase resulted primarily from a curtailment of lending of
$8.0 million and $4.5 million  decrease in the investment  securities  available
for sale  portfolio.  Such decrease in this portfolio was due to the decrease of
$2.5 million in purchases and a $2.3 million increase primarily from proceeds in
sales.

         Net cash used for financing  activities (i.e., cash receipts  primarily
used for or from borrowed funds) increased $12.2 million to $2.8 million for the
year ended  December  31, 2000 from $9.4  million of cash  provided by financing
activities.  In response to the  Agreement,  such increase in funds was used for
financing activities relating to borrowed funds. During fiscal 2000, the Company
used $7.5  million  in funds to payoff  certain  borrowings  and  reduced  funds
received from borrowed funds by $4.7 million.

                                       9
<PAGE>

[LOGO]
SNODGRASS
Certified Public Accountants and Consultants




                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------



Board of Directors and Stockholders
Carnegie Financial Corporation

We  have  audited  the  accompanying  consolidated  balance  sheet  of  Carnegie
Financial Corporation and subsidiary,  as of December 31, 2000 and 1999, and the
related consolidated  statements of income, changes in stockholders' equity, and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management  as well as  evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Carnegie Financial
Corporation  and subsidiary as of December 31, 2000 and 1999, and the results of
their  operations  and their cash  flows for the years then ended in  conformity
with accounting principles generally accepted in the United States of America.



/s/S.R. Snodgrass, A.C.

Wexford, PA
February 22, 2001

<TABLE>
<CAPTION>
<S>                                                   <C>
S.R. Snodgrass, A.C.
1000 Stonewood Drive, Suite 200 Wexford, PA 15090-8399 Phone: 724-934-344 Facsimile: 724-934-0345
</TABLE>

                                       10
<PAGE>

                         CARNEGIE FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                        2000               1999
                                                                                  -----------------  -----------------
<S>                                                                              <C>                <C>
ASSETS
     Cash and due from banks                                                      $        237,958   $        504,005
     Interest-bearing deposits in other banks                                              564,330            286,780
                                                                                  -----------------  -----------------
     Cash and cash equivalents                                                             802,288            790,785

     Certificates of deposit in other banks                                                100,000            100,000
     Investment securities available for sale                                            1,249,382          3,323,894
     Investment securities held to maturity (market
       value of $144,870)                                                                        -            145,000
     Mortgage-backed securities available for sale                                         609,050            690,164
     Mortgage-backed securities held to maturity (market
       value of $618,846 and $750,369)                                                     613,823            743,385
     Loans receivable (net of allowance for loan losses
       of $202,533 and $203,648)                                                        22,385,789         22,518,456
     Accrued interest receivable                                                           135,412            180,797
     Premises and equipment                                                                216,901            225,827
     Federal Home Loan Bank stock                                                          287,500            564,900
     Other assets                                                                          337,634            205,393
                                                                                  -----------------  -----------------
             TOTAL ASSETS                                                         $     26,737,779   $     29,488,601
                                                                                  =================  =================
LIABILITIES
     Deposits                                                                     $     17,498,223   $     16,551,544
     Borrowed funds                                                                      5,750,000          9,537,500
     Advances by borrowers for taxes and insurance                                         265,073            275,758
     Accrued interest payable and other liabilities                                        434,267            431,191
                                                                                  -----------------  -----------------
             TOTAL LIABILITIES                                                          23,947,563         26,795,993
                                                                                  -----------------  -----------------
Commitments and contingencies

STOCKHOLDERS' EQUITY
     Preferred stock, no par value; 2,000,000 shares
       authorized; none issued                                                                   -                  -
     Common stock, $.10 par value; 4,000,000 shares
       authorized, 238,050 issued                                                           23,805             23,805
     Additional paid-in capital                                                          2,057,534          2,062,493
     Retained earnings - substantially restricted                                        1,095,409          1,203,806
     Unallocated shares held by Employee Stock Ownership Plan (ESOP)                      (140,926)          (161,874)
     Unallocated shares held by Restricted Stock Plan (RSP)                                (57,640)           (64,750)
     Accumulated other comprehensive loss                                                  (58,460)          (241,366)
     Treasury stock, at cost (13,274 shares)                                              (129,506)          (129,506)
                                                                                  -----------------  -----------------
             TOTAL STOCKHOLDERS' EQUITY                                                  2,790,216          2,692,608
                                                                                  -----------------  -----------------
             TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $     26,737,779   $     29,488,601
                                                                                  =================  =================
</TABLE>
See accompanying notes to the consolidated financial statements.

                                       11
<PAGE>
                         CARNEGIE FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                                        2000               1999
                                                                                  -----------------  -----------------
<S>                                                                             <C>                <C>
INTEREST AND DIVIDEND INCOME
     Loans receivable                                                             $      1,719,815   $      1,466,934
     Interest-bearing deposits in other banks                                               19,961             39,475
     Investment securities:
         Taxable                                                                           182,154            241,616
         Exempt from federal income tax                                                      2,781             12,072
     Mortgage-backed securities                                                             90,882            104,609
                                                                                  -----------------  -----------------
             Total interest and dividend income                                          2,015,593          1,864,706
                                                                                  -----------------  -----------------
INTEREST EXPENSE
     Deposits                                                                              749,160            638,423
     Borrowed funds                                                                        437,168            371,543
                                                                                  -----------------  -----------------
             Total interest expense                                                      1,186,328          1,009,966
                                                                                  -----------------  -----------------
NET INTEREST INCOME                                                                        829,265            854,740

Provision for loan losses                                                                   69,603             65,831
                                                                                  -----------------  -----------------
NET INTEREST INCOME AFTER
   PROVISION FOR LOAN LOSSES                                                               759,662            788,909
                                                                                  -----------------  -----------------
NONINTEREST INCOME
     Service fees                                                                           97,560             86,897
     Investment securities losses, net                                                    (263,845)           (21,578)
     Other income                                                                           12,871             48,741
                                                                                  -----------------  -----------------
             Total noninterest income                                                     (153,414)           114,060
                                                                                  -----------------  -----------------
NONINTEREST EXPENSE
     Compensation and employee benefits                                                    374,535            378,036
     Occupancy and equipment                                                                75,278             71,296
     Data processing                                                                       113,822            109,035
     Professional fees                                                                      92,123             69,501
     Other                                                                                 120,090            124,037
                                                                                  -----------------  -----------------
             Total noninterest expense                                                     775,848            751,905
                                                                                  -----------------  -----------------
Income (loss) before income tax expense (benefit)                                         (169,600)           151,064
Income tax expense (benefit)                                                               (61,203)            42,834
                                                                                  -----------------  -----------------
NET INCOME (LOSS)                                                                 $       (108,397)  $        108,230
                                                                                  =================  =================
EARNINGS (LOSS) PER SHARE
     Basic                                                                        $          (0.53)  $           0.47
     Diluted                                                                                 (0.53)              0.46
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       12
<PAGE>
                                     CARNEGIE FINANCIAL CORPORATION
                       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                        Accumu-
                                                                                        lated
                                                                                        Other
                                                Retained     Unallocated Unallocated    Compre-                  Total     Compre-
                                   Additional   Earnings       Shares       Shares      hensive                  Stock-    hensive
                         Common     Paid-in    Substantially   Held by     Held by      Income    Treasury      holders'   Income
                         Stock      Capital     Restricted      ESOP         RSP        (Loss)     Stock         Equity    (Loss)
                         --------  ----------  ----------    ---------   ----------  ---------  -----------   ----------  ----------
<S>                    <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                                        108,230                                                        108,230  $ 108,230
Other comprehensive
loss:
    Unrealized loss
      on available
      for sale
      securities,
      net of
      reclassification
      adjustment, net
      of tax benefit
      of $126,624                                                                     (245,800)                 (245,800)  (245,800)
                                                                                                                          ---------
Comprehensive loss                                                                                                        $(137,570)
                                                                                                                          =========
Release of earned
  ESOP shares                          (2,409)                  19,044                                            16,635
Treasury stock
  purchased, at cost                                                                               (129,506)    (129,506)
Common stock
  acquired by RSP                      (7,142)                              (80,937)                             (88,079)
Release of earned
  RSP shares                                                                 16,187                               16,187
Cash dividends paid
  ($.10 per share)                                (22,478)                                                       (22,478)
                         --------  ----------  ----------    ---------   ----------    -------  -----------   ----------
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                                         (108,397)                                                      (108,397)  (108,230)
Other comprehensive
income:
    Unrealized
      gain on available
      for sale
      securities,
      net of
      reclassification
      adjustment, net
      of tax expense
      of $94,224                                                                       182,906                   182,906    182,906
                                                                                                                          ---------
Comprehensive income                                                                                                      $  74,676
                                                                                                                          =========
Release of earned
  ESOP shares                          (4,959)                  20,948                                            15,989
Release of earned
  RSP shares                                                                  7,110                                7,110
                         --------  ----------  ----------    ---------   ----------  ---------  -----------   ----------
Balance,
  December 31, 2000      $ 23,805  $2,057,534  $1,095,409    $(140,926)  $  (57,640) $ (58,460) $  (129,506)  $2,790,216
                         ========  ==========  ==========    =========   ==========  =========  ===========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     2000          1999
                                                                                                 -------------  ------------
<S>                                                                                           <C>            <C>
Components of other comprehensive income (loss):
    Change in net unrealized gain (loss) on investment securities available for sale            $      8,768    $  (260,041)
     Realized losses included in net income, net of tax benefit of $89,707 and $7,337                174,138         14,241
                                                                                                 -------------  ------------
Total                                                                                            $   182,906    $  (245,800)
                                                                                                 =============  ============
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       13
<PAGE>

                        CARNEGIE FINANCIAL CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                        Year Ended December 31,
                                                                                        2000               1999
                                                                                  -----------------  -----------------
<S>                                                                             <C>                <C>
OPERATING ACTIVITIES
     Net income (loss)                                                            $       (108,397)  $        108,230
     Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:
         Provision for loan losses                                                          69,603             65,831
         Depreciation, amortization, and accretion, net                                    (29,639)           (22,536)
         Investment securities losses, net                                                 263,845             21,578
         Deferred income taxes                                                               6,816             42,119
         Decrease (increase) in accrued interest receivable                                 45,385            (66,122)
         Increase (decrease) in accrued interest payable                                  (111,195)           137,722
         Amortization of ESOP unearned compensation                                         15,989             19,044
         Amortization of RSP unearned compensation                                           7,110             16,635
         Other, net                                                                       (119,019)           (56,417)
                                                                                  -----------------  -----------------
         Net cash provided by operating activities                                          40,498            266,084
                                                                                  -----------------  -----------------
INVESTING ACTIVITIES
     Decrease in certificates of deposit in other banks                                          -             99,000
     Investment securities available for sale:
         Purchases                                                                        (491,688)        (2,993,369)
         Proceeds from sales                                                             2,627,770            601,130
         Maturities and repayments                                                               -            300,000
     Maturities and repayments of investments held to maturity                             145,000             45,000
     Mortgage-backed securities available for sale:
         Maturities and repayments                                                          91,480            320,183
     Maturities and repayments of mortgage-backed securities
       held to maturity                                                                    129,562            323,229
     Net decrease (increase) in loans receivable                                            63,064         (8,072,166)
     Redemption (purchase) of Federal Home Loan Bank stock                                 277,400           (462,000)
     Purchase of premises and equipment, net                                               (20,077)            (4,420)
                                                                                  -----------------  -----------------
         Net cash provided by (used for) investing activities                            2,822,511         (9,843,413)
                                                                                  -----------------  -----------------
FINANCING ACTIVITIES
     Net increase in deposits                                                              946,679          1,179,374
     Net increase (decrease) in advances by borrowers
       for taxes and insurance                                                             (10,685)            96,195
     Proceeds from borrowed funds                                                        3,750,000          8,537,500
     Repayment of borrowed funds                                                        (7,537,500)          (200,000)
     Purchase of treasury stock, at cost                                                         -           (129,506)
     Common stock acquired by RSP                                                                -            (80,937)
                                                                                  -----------------  -----------------
         Net cash provided by (used for) financing activities                           (2,851,506)         9,402,626
                                                                                  -----------------  -----------------
         Increase (decrease) in cash and cash equivalents                                   11,503           (174,703)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                             790,785            965,488
                                                                                  -----------------  -----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                          $        802,288   $        790,785
                                                                                  =================  =================
SUPPLEMENTAL CASH FLOW DISCLOSURE
     Cash paid during the year for:
         Interest on deposits and borrowings                                      $      1,297,523   $        872,244
         Income taxes                                                                       64,000             41,250
</TABLE>

See accompanying notes to the consolidated financial statements.

                                       14
<PAGE>
                         CARNEGIE FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A summary  of  significant  accounting  and  reporting  policies  applied in the
presentation of the accompanying financial statements follows:

Nature of Operations and Basis of Presentation
----------------------------------------------

Carnegie Financial Corporation (the "Company") is a Pennsylvania Corporation and
is registered  under the Bank Holding  Company Act. The Company was organized to
be the holding  company of Carnegie  Savings Bank (the  "Bank").  The  Company's
principal  sources of revenue emanate from interest  earnings on its investment,
mortgage-backed   securities,   and  mortgage,   commercial  and  consumer  loan
portfolios  as well as a variety of deposit  services  provided to its customers
through its one retail location. The Bank is a federally-chartered stock savings
bank located in Carnegie,  Pennsylvania. The Company and the Bank are subject to
regulation and supervision by the Office of Thrift Supervision.

The consolidated financial statements of the Company include the accounts of its
wholly-owned  subsidiary,  the Bank.  All  intercompany  transactions  have been
eliminated  in  consolidation.  The  investment  in  subsidiary  on  the  parent
company's financial  statements is carried at the parent company's equity in the
underlying net assets of the Bank.

The  accounting  principles  followed by the Company and the methods of applying
these principles conform with generally accepted accounting  principles and with
general  practice  within the  banking  industry.  In  preparing  the  financial
statements, management is required to make estimates and assumptions that affect
the reported  amounts of assets and liabilities as of the  consolidated  balance
sheet date and revenues and expenses for the period. Actual results could differ
significantly from those estimates.

Investment and Mortgage-backed Securities
-----------------------------------------

Investment securities,  including mortgage-backed  securities, are classified at
the time of  purchase,  based  upon  management's  intentions  and  ability,  as
securities  held to maturity or securities  available for sale.  Debt securities
acquired with the intent and ability to hold to maturity are  classified as held
to maturity and are stated at cost and adjusted for  amortization of premium and
accretion  of  discount,  which are  computed  using a level  yield  method  and
recognized as adjustments of interest income. Certain other debt securities have
been  classified  as  available  for sale to serve  principally  as a source  of
liquidity.  Unrealized holding gains and losses on available for sale securities
are reported as a separate component of stockholders'  equity, net of tax, until
realized.  Realized  securities gains and losses are computed using the specific
identification  method.  Interest and  dividends on  investment  securities  are
recognized as income when earned.

Common stock of the Federal Home Loan Bank (the "FHLB") represents  ownership in
an institution  which is  wholly-owned  by other  financial  institutions.  This
equity  security  is  accounted  for at  cost  and  reported  separately  on the
accompanying consolidated balance sheet.

Loans Receivable
----------------

Loans  receivable  are  stated at their  unpaid  principal  amounts,  net of the
allowance for loan losses. Interest on loans is recognized as income when earned
on the accrual method. Interest accrued on loans more than 90 days delinquent is
generally offset by a reserve for uncollected  interest and is not recognized as
income.

                                       15
<PAGE>

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loans Receivable (Continued)
----------------

The accrual of interest is generally  discontinued  when  management has serious
doubts about further  collectibility  of principal or interest,  even though the
loan is currently  performing.  A loan may remain on accrual  status if it is in
the process of collection and is either guaranteed or well secured.  When a loan
is placed on  nonaccrual  status,  unpaid  interest is charged  against  income.
Interest received on nonaccrual loans is either applied to principal or reported
as interest income,  according to management's judgment as to the collectibility
of principal.

Allowance for Loan Losses
-------------------------

The allowance for loan losses  represents the amount which management  estimates
is adequate to provide for potential losses in its loan portfolio. The allowance
method is used in providing  for loan losses.  Accordingly,  all loan losses are
charged to the  allowance,  and all recoveries are credited to it. The allowance
for loan  losses is  established  through a provision  for loan losses  which is
charged to operations.  The provision is based on management's 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
estimates  used in  determining  the adequacy of the  allowance for loan losses,
including  the  amounts  and timing of future  cash flows  expected  on impaired
loans, are particularly susceptible to significant changes in the near term.

Commercial and commercial  real estate loans are considered  impaired when it is
probable  the  borrower  will not  repay  the  loan  according  to the  original
contractual  terms of the loan  agreement.  Management has determined that first
mortgage loans on one-to-four family properties and all consumer loans represent
large groups of  smaller-balance  homogeneous  loans that are to be collectively
evaluated. Loans that experience insignificant payment delays, which are defined
as 90 days or less,  generally  are not  classified  as impaired.  A loan is not
impaired  during a period of delay in payment if the Company  expects to collect
all amounts due including interest accrued at the contractual  interest rate for
the  period  of  delay.   All  loans   identified   as  impaired  are  evaluated
independently  by management.  The Company  estimates  credit losses on impaired
loans based on the present  value of expected  cash flows,  or the fair value of
the  underlying  collateral  if the loan  repayment is expected to come from the
sale or operation of such collateral.  Impaired loans, or portions thereof,  are
charged off when it is determined that a realized loss has occurred.  Until such
time,  an allowance for loan losses is maintained  for  estimated  losses.  Cash
receipts on impaired  loans are applied  first to accrued  interest  receivable,
unless  otherwise  required by the loan terms,  except when an impaired  loan is
also a  nonaccrual  loan in which case the  portion of the  receipts  related to
interest is recognized as income.

Premises and Equipment
----------------------

Premises  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation is calculated using the straight-line  method over the useful lives
of the related assets.  Expenditures  for maintenance and repairs are charged to
operations  as  incurred.   Costs  of  major  additions  and   improvements  are
capitalized.

Federal Income Taxes
--------------------

Deferred tax assets or liabilities are computed based on the difference  between
the financial statement and income tax basis of assets and liabilities using the
enacted  marginal tax rates.  Deferred income tax expenses or benefits are based
on the changes in the deferred tax asset or liability from period to period.

                                       16
<PAGE>

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Stock Options
-------------

The Company  maintains  a stock  option plan for the  directors,  officers,  and
employees.  When the exercise  price of the  Company's  stock options is greater
than or equal to the  market  price of the  underlying  stock on the date of the
grant,  no  compensation  expense  is  recognized  in  the  Company's  financial
statements. Pro forma net income and earnings per share are presented to reflect
the impact of the stock  option  plan  assuming  compensation  expense  had been
recognized based on the fair value of the stock options granted under this plan.

Comprehensive Income
--------------------

The Company is required to present comprehensive income in a full set of general
purpose  financial  statements for all periods  presented.  Other  comprehensive
income is comprised  exclusively  of unrealized  holding  gains  (losses) on the
available for sale securities  portfolio.  The Company has elected to report the
effects of other comprehensive  income as part of the Consolidated  Statement of
Changes in Stockholders' Equity.

Earnings Per Share
------------------

The Company provides dual  presentation of basic and diluted earnings per share.
Basic earnings per share is calculated  utilizing net income or loss as reported
as  the  numerator  and  average  shares  outstanding  as the  denominator.  The
computation of diluted  earnings per share differs in that the dilutive  effects
of any options,  warrants,  and  convertible  securities are adjusted for in the
denominator.

Recent Accounting Pronouncements
--------------------------------

In September 2000, the FASB issued Statement No. 140,  "Accounting for Transfers
and  Servicing of Financial  Assets and  Extinguishments  of  Liabilities."  The
Statement replaces FASB Statement No. 125 and provides consistent  standards for
distinguishing  transfers of financial assets that are sales from transfers that
are  secured  borrowings  based  on  a  control-oriented  "financial-components"
approach.  Under this approach,  after a transfer of financial assets, an entity
recognizes the financial and servicing assets it controls and liabilities it has
incurred,  derecognizes  financial  assets when control has been surrendered and
derecognizes liabilities when extinguished.  The provisions of Statement No. 140
are effective for transactions occurring after March 31, 2001. This Statement is
effective for recognition and reclassification of collateral and for disclosures
relating to  securitization  transactions and collateral for fiscal years ending
after  December 15, 2000. The adoption of the provisions of Statement No. 140 is
not  expected  to have a material  impact on  financial  position  or results of
operations.

Reclassification of Comparative Amounts
---------------------------------------

Certain  comparative  account balances for the prior year have been reclassified
to conform to the current period classifications. Such reclassifications did not
affect net income or stockholders' equity.

                                       17
<PAGE>

2.  EARNINGS PER SHARE

There  are  no  convertible  securities  that  would  affect  the  numerator  in
calculating basic and diluted earnings per share; therefore,  net income or loss
as presented on the  Consolidated  Statement of Income is used as the numerator.
The following  table sets forth the composition of the  weighted-average  common
shares   (denominator)  used  in  the  basic  and  diluted  earnings  per  share
computation.

                                                          2000           1999
                                                        --------       --------

Weighted-average common shares
  outstanding                                            238,050        266,083

Average treasury shares                                  (13,274)        (9,015)

Average unearned ESOP and RSP shares                     (21,747)       (25,552)
                                                        --------       --------
Weighted-average common shares and
  common stock equivalents used to
  calculate basic earnings per share                     203,029        231,516

Additional common stock equivalents
  (RSP shares) used to calculate
  diluted earnings per share
                                                            --            5,693
Additional common stock equivalents
  (stock options) used to calculate
  diluted earnings per share
                                                            --              504
                                                        --------       --------
Weighted-average common shares and
  common stock equivalents used
  to calculate diluted earnings per share                203,029        237,713
                                                        ========       ========

3.    INVESTMENT SECURITIES

On  April 1,  1999,  the  Company  adopted  Statement  of  Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities." In adopting Statement No. 133, the Company has reclassified certain
investment securities from the held to maturity  classification to the available
for sale classification.  These securities had an amortized cost of $489,000 and
an estimated market value of $502,000 at the date of reclassi-fication.

The  amortized  cost  and  estimated  market  values  of  investment  securities
available for sale and held to maturity are summarized as follows:

<TABLE>
<CAPTION>
                                                                            2000
                                         ---------------------------------------------------------------------------
                                                                 Gross              Gross             Estimated
                                            Amortized          Unrealized         Unrealized            Market
                                               Cost              Gains              Losses              Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>
Available for Sale
U.S. Government agency
  securities                             $      1,345,112   $              -   $       (95,730)    $       1,249,382
                                         =================  =================  =================   =================
</TABLE>

                                       18
<PAGE>

3.    INVESTMENT SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                            1999
                                      ------------------------------------------------------------------------------
                                                                 Gross              Gross             Estimated
                                            Amortized          Unrealized         Unrealized            Market
                                               Cost              Gains              Losses              Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>
Available for Sale
U.S. Government agency
  securities                             $      3,686,389   $              -   $      (362,495)    $      3,323,894
                                         =================  =================  =================   =================
Held to Maturity
Obligations of states and
  political subdivisions                 $        145,000   $             90   $          (220)    $        144,870
                                         =================  =================  =================   =================
</TABLE>

The amortized cost and estimated  market value of investments in debt securities
at December 31, 2000, all due after ten years,  are  $1,345,112 and  $1,249,382,
respectively.

Proceeds from sales of investment  securities available for sale and gross gains
and losses  realized  on those sales for the years  ended  December  31, were as
follows:

<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                           <C>                 <C>
     Proceeds from sales                                                       $      2,627,770    $        601,130
     Gross gains                                                                         27,885              14,468
     Gross losses                                                                       291,730              36,046

</TABLE>

                                       19
<PAGE>

4.    MORTGAGE-BACKED SECURITIES

The amortized  cost and estimated  market values of  mortgage-backed  securities
available for sale and held to maturity are summarized as follows:
<TABLE>
<CAPTION>
                                                                            2000
                                         ---------------------------------------------------------------------------
                                                                 Gross              Gross             Estimated
                                            Amortized          Unrealized         Unrealized            Market
                                               Cost              Gains              Losses              Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>
Available for Sale
     Government National
       Mortgage Association              $         51,701   $             84   $           (101)   $         51,684
     Federal Home Loan
       Mortgage Corporation                       107,127                842                (10)            107,959
     Federal National Mortgage
       Association                                271,317              2,655               (330)            273,642
     Collateralized mortgage
       obligations                                171,751              4,014                  -             175,765
                                         -----------------  -----------------  -----------------   -----------------
                    Total                $        601,896   $          7,595   $           (441)   $        609,050
                                         =================  =================  =================   =================
Held to Maturity
     Government National
       Mortgage Association              $        598,483 $            5,722   $           (781)   $        603,424
     Federal Home Loan
       Mortgage Corporation                         6,697                 54                  -               6,751
     Federal National Mortgage
       Association                                  8,643                 28                  -               8,671
                                         -----------------  -----------------  -----------------   -----------------
                    Total                $        613,823   $          5,804   $           (781)   $        618,846
                                         =================  =================  =================   =================
</TABLE>

                                       20
<PAGE>

4.    MORTGAGE-BACKED SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                            1999
                                         ---------------------------------------------------------------------------
                                                                 Gross              Gross             Estimated
                                            Amortized          Unrealized         Unrealized            Market
                                               Cost              Gains              Losses              Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>
Available for Sale
     Government National
        Mortgage Association             $         67,652   $            229   $          (989)    $         66,892
     Federal Home Loan
        Mortgage Corporation                      133,200                321             (1,007)            132,514
     Federal National Mortgage
        Association                               307,302                715             (5,990)            302,027
     Collateralized mortgage
        obligations                               185,222              3,509                  -             188,731
                                         -----------------  -----------------  -----------------   -----------------
                    Total                $        693,376   $          4,774   $         (7,986)   $        690,164
                                         =================  =================  =================   =================
Held to Maturity
     Government National
        Mortgage Association             $        723,307   $          7,239   $           (264)   $        730,282
     Federal Home Loan
        Mortgage Corporation                        9,383                 16                 (7)              9,392
     Federal National Mortgage
        Association                                10,695                  -                  -              10,695
                                         -----------------  -----------------  -----------------   -----------------
                    Total                $        743,385   $          7,255   $           (271)   $        750,369
                                         =================  =================  =================   =================
</TABLE>

The amortized cost and estimated market value of  mortgage-backed  securities at
December 31, 2000, by  contractual  maturity,  are shown below.  Mortgage-backed
securities  provide for periodic  payments of  principal  and  interest.  Due to
expected repayment terms being  significantly less than the underlying  mortgage
loan pool contractual maturities,  the estimated lives of these securities could
be significantly shorter.
<TABLE>
<CAPTION>
                                                 Available for Sale                      Held to Maturity
                                         ------------------------------------  -------------------------------------
                                                               Estimated                              Estimated
                                            Amortized            Market           Amortized             Market
                                               Cost              Value               Cost               Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>

     Due after one year through
       five years                        $         16,438   $         16,429   $              -    $              -
     Due after five years through
       ten years                                   60,444             60,783              6,696               6,750
     Due after ten years                          525,014            531,838            607,127             612,096
                                         -----------------  -----------------  -----------------   -----------------
                    Total                $        601,896   $        609,050   $        613,823    $        618,846
                                         =================  =================  =================   =================
</TABLE>

                                       21
<PAGE>

5.    LOANS RECEIVABLE

Loans receivable consists of the following:

<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                        <C>                <C>
Mortgage loans:
     One-to-four family                                                      $       19,112,044 $        17,811,141
     Home equity                                                                        733,458             775,417
     Construction                                                                        34,464           1,573,450
     Commercial                                                                       1,249,845           1,069,936
                                                                               -----------------   -----------------
                                                                                     21,129,811          21,229,944
                                                                               -----------------   -----------------
Consumer loans:
     Share loans                                                                        173,207             144,126
     Automobile loans                                                                   383,942             513,457
     Other                                                                              164,898             270,104
                                                                               -----------------   -----------------
                                                                                        722,047             927,687
                                                                               -----------------   -----------------
Commercial lines of credit                                                              736,464             564,473
                                                                               -----------------   -----------------
                    Subtotal                                                         22,588,322          22,722,104
Less:
     Allowance for loan losses                                                          202,533             203,648
                                                                               -----------------   -----------------
                    Total                                                      $     22,385,789    $     22,518,456
                                                                               =================   =================
</TABLE>

The Company's  primary  business  activity is with customers  located within its
local trade area.  Residential,  consumer,  and  commercial  loans are  granted.
Although the Company has a diversified  loan  portfolio at December 31, 2000 and
1999,  the  repayment  of these  loans is  dependent  upon  the  local  economic
conditions in its immediate trade area.

Activity in the allowance for loan losses for the years ended December 31, is as
follows:
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
     Balance, January 1                                                        $        203,648    $        138,860
     Add:
       Provisions charged to operations                                                  69,603              65,831
       Loan recoveries                                                                   20,060                 430

     Less loans charged off                                                              90,778               1,473
                                                                               -----------------   -----------------
     Balance, December 31                                                      $        202,533    $        203,648
                                                                               =================   =================
</TABLE>

The Company had nonaccrual loans of $72,729 and $38,720 at December 31, 2000 and
1999, respectively, which in management's opinion did not meet the definition of
impaired. Interest income on loans would have been increased by $3,524 and $997,
respectively,  if these loans had  performed in accordance  with their  original
terms.

                                       22
<PAGE>

5.    LOANS RECEIVABLE (Continued)

In the normal  course of business,  loans are extended to  directors,  executive
officers, and their associates.  A summary of loan activity for those directors,
executive officers,  and their associates with aggregate loan balances in excess
of $60,000 for the year ended December 31, 2000, is as follows:

          1999            Additions          Repayments             2000
    -----------------  -----------------  -----------------   -----------------

    $        287,145   $               -  $        142,553    $        144,592

6.    ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consists of the following:
<TABLE>
<CAPTION>
                                                             2000                1999
                                                       -----------------   -----------------
<S>                                                  <C>                 <C>
     Investment securities                             $          6,198    $         56,730
     Mortgage-backed securities                                  10,916              14,160
     Interest-bearing deposits                                    1,211                 888
     Loans receivable                                           117,087             109,019
                                                       -----------------   -----------------
                  Total                                $        135,412    $        180,797
                                                       =================   =================
</TABLE>

7.    PREMISES AND EQUIPMENT

Premises and equipment consist of the following:
<TABLE>
<CAPTION>
                                                             2000                1999
                                                       -----------------   -----------------
<S>                                                  <C>                 <C>
     Land and improvements                             $          7,900    $          7,900
     Buildings and improvements                                 254,384             254,384
     Furniture and equipment                                    197,018             177,976
                                                       -----------------   -----------------
                                                                459,302             440,260
     Less accumulated depreciation                              242,401             214,433
                                                       -----------------   -----------------
                    Total                              $        216,901    $        225,827
                                                       =================   =================
</TABLE>

Depreciation  expense for the years ended December 31, 2000 and 1999 was $29,003
and $26,747, respectively.

8.    FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the FHLB  System.  As a member,  the Bank  maintains  an
investment in the capital stock of the FHLB of Pittsburgh, at cost, in an amount
not less than the greater of one percent of its  outstanding  home loans or five
percent of its outstanding notes payable to the FHLB of Pittsburgh as calculated
at December 31 of each year.

                                       23
<PAGE>

9.    DEPOSITS

Comparative details of deposits are as follows:
<TABLE>
<CAPTION>
                                                     2000                                      1999
                                      ------------------------------------     -------------------------------------
                                           Amount               %                   Amount                %
                                      -----------------  -----------------     -----------------   -----------------
<S>                                 <C>                            <C>       <C>                             <C>
Noninterest-bearing                   $      1,027,617               5.87 %    $        914,839                5.53 %
                                      -----------------  -----------------     -----------------   -----------------
Interest-bearing
     Savings                                 4,484,013              25.63             3,739,191               22.59
     NOW checking                            1,449,259               8.28             1,479,222                8.94
                                      -----------------  -----------------     -----------------   -----------------
                                             5,933,272              33.91             5,218,413               31.53
                                      -----------------  -----------------     -----------------   -----------------
Time certificates of deposit
     2.00 - 3.99%                                    -                  -               710,393                4.29
     4.00 - 5.99%                            4,765,466              27.23             5,566,611               33.63
     6.00 - 7.99%                            5,576,135              31.87             3,954,869               23.89
     8.00 - 9.99%                              195,733               1.12               186,419                1.13
                                      -----------------  -----------------     -----------------   -----------------
                                            10,537,334              60.22            10,418,292               62.94
                                      -----------------  -----------------     -----------------   -----------------
               Total                  $     17,498,223             100.00 %    $     16,551,544              100.00 %
                                      =================  =================     =================   =================
</TABLE>

The aggregate  amount of certificates of deposit with a minimum  denomination of
$100,000  was   $1,171,972  and  $1,255,737  at  December  31,  2000  and  1999,
respectively. Deposits in excess of $100,000 are not federally insured.

The scheduled maturities of time certificates of deposit as of December 31, 2000
are as follows:
<TABLE>
<CAPTION>
<S>                                                                                              <C>
     Three months or less                                                                          $        234,442
     Three to six months                                                                                    103,956
     Six to twelve months                                                                                   626,634
     Over twelve months                                                                                     206,940
                                                                                                   -----------------
          Total                                                                                    $      1,171,972
                                                                                                   =================
</TABLE>

Interest  expense by deposit  category  for the years ended  December  31, is as
follows:
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
     Savings                                                                   $        124,176    $         90,408
     NOW                                                                                 29,387              29,217
     Time certificates of deposit                                                       595,597             518,798
                                                                               -----------------   -----------------
           Total                                                               $        749,160    $        638,423
                                                                               =================   =================
</TABLE>

                                       24
<PAGE>

BORROWED FUNDS

Borrowed  funds  consist of fixed rate,  adjustable  rate and  convertible  rate
advances from the FHLB of Pittsburgh as follows:
<TABLE>
<CAPTION>
                                             Interest
                 Maturity                      Rate                                  2000                1999
     ---------------------------------   -----------------                     -----------------   -----------------
<S>                                         <C>                              <C>                 <C>
     January 24, 2000                         6.44%                            $              -    $      2,000,000
     December 30, 2000                        4.06%                                           -           2,537,500
     December 30, 2001                        6.64%                                     750,000                   -
     May 27, 2003                             7.54%                                   1,000,000                   -
     October 16, 2003                         6.28%                                           -           1,000,000
     December 17, 2004                        5.60%                                           -           2,000,000
     December 22, 2005, convertible           5.36%                                   1,000,000                   -
     January 22, 2009, convertible            4.99%                                   2,000,000           2,000,000
     May 19, 2010, convertible                6.75%                                   1,000,000                   -
                                                                               -----------------   -----------------
                                                                               $      5,750,000    $      9,537,500
                                                                               =================   =================
</TABLE>

The  Bank  has the  capability  to  borrow  additional  funds  through  a credit
arrangement with the FHLB. This credit  arrangement is subject to annual renewal
and incurs no service  charges.  Borrowings  are  secured by a blanket  security
agreement  on certain  investment  and  mortgage-backed  securities,  qualifying
residential  mortgages,  and the Bank's investment in FHLB stock. As of December
31, 2000, the Bank's maximum borrowing  capacity with the FHLB was approximately
$18 million.

11.   INCOME TAXES

The components of income tax expense  (benefit) for the years ended December 31,
are summarized as follows:
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
Current payable (receivable):
     Federal                                                                   $        (68,019)   $         84,953
     State                                                                                    -                   -
                                                                               -----------------   -----------------
                                                                                        (68,019)             84,953
Deferred taxes                                                                           (4,039)            (35,938)
Change in valuation allowance                                                            10,855              (6,181)
                                                                               -----------------   -----------------
                         Total                                                 $        (61,203)   $          42,834
                                                                               =================   =================
</TABLE>

                                       25
<PAGE>

11.   INCOME TAXES (Continued)

The following temporary differences gave rise to the net deferred tax assets:
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
Deferred tax assets:
     Allowance for loan losses                                                 $         67,624    $         69,240
     Net unrealized loss on securities                                                   30,116             124,340
     Accrual to cash adjustment                                                          54,608              64,683
     Deferred loan fees                                                                   6,590               6,443
     Management recognition plan                                                          6,758               5,504
     State net operating loss carryforward                                               15,308               4,453
                                                                               -----------------   -----------------
                    Total gross deferred tax assets                                     181,004             274,663
                    Less valuation allowance                                            (15,308)             (4,453)
                                                                               -----------------   -----------------
                          Total deferred tax assets                                     165,696             270,210
                                                                               -----------------   -----------------
Deferred tax liabilities:
     Premises and equipment                                                              14,117              17,591
                                                                               -----------------   -----------------
                    Total gross deferred tax liabilities                                 14,117              17,591
                                                                               -----------------   -----------------
                          Net deferred tax assets                              $        151,579    $        252,619
                                                                               =================   =================
</TABLE>

The  reconciliation  of the federal  statutory rate and the Company's  effective
income tax rate is as follows:
<TABLE>
<CAPTION>
                                                      2000                                     1999
                                      -------------------------------------     ------------------------------------
                                                                % of                                     % of
                                                              Pre-tax                                  Pre-tax
                                           Amount              Income                Amount              Loss
                                      ------------------  -----------------     -----------------  -----------------
<S>                                 <C>                           <C>         <C>                           <C>
Provision (benefit) at
  statutory rate                      $        (57,664)             (34.0) %    $        51,361               34.0 %
Tax-exempt income                                 (531)              (0.4)               (4,104)              (2.7)
Other                                           (3,008)              (1.7)               (4,423)              (2.9)
                                      ------------------  -----------------     -----------------  -----------------
     Actual tax expense (benefit)
        and effective rate            $        (61,203)             (36.1) %    $        42,834               28.4 %
                                      ==================  =================     =================  =================
</TABLE>

The Bank is subject to the Pennsylvania Mutual Thrift  Institution's tax that is
calculated at 11.5 percent of earnings  based on generally  accepted  accounting
principles with certain adjustments.

12.   EMPLOYEE BENEFITS

Simplified Employee Pension Plan ("SEP")
----------------------------------------

The Company maintains a SEP plan that provides for an annual contribution at the
discretion of the Board of Directors up to 15 percent of the eligible employee's
compensation. Employees are eligible when they attain the age of 21, have worked
for the Company at least one and a half of the  immediately  preceding five plan
years, and have received annual  compensation of at least three hundred dollars.
No contributions were made in 2000 and 1999.

                                       26
<PAGE>

12.   EMPLOYEE BENEFITS (Continued)

Directors Consultation and Supplemental Executive Retirement Plans
------------------------------------------------------------------

The Company maintains a nonqualified  Directors Consultation and Retirement Plan
(the "Directors Plan") to provide post-retirement  benefits over a period of ten
years to members of the Board of Directors who have completed at least ten years
of service and have  attained  the age of 60.  Pursuant to the  Directors  Plan,
benefits  become fully vested and payable upon  disability,  death, or change of
control of the Company. No expense was incurred for the years ended December 31,
2000 and 1999, respectively.

The Company also maintains a nonqualified Supplemental Executive Retirement Plan
(the "Plan") to provide an executive officer with post-retirement benefits for a
period of ten years,  provided  an  officer  has at least 25 years of service at
retirement  at age 65.  Pursuant to the Plan,  benefits  become fully vested and
payable  upon  disability,  death,  or change of control of the  Company.  Total
expenses  incurred  amounted to $40,603 and $42,063 for the years ended December
31, 2000 and 1999, respectively.

The  assumptions of 6.50 percent and 5.00 percent for the discount rate and rate
of compensation  increase,  respectively,  were used in determining net periodic
post-retirement  costs for the Directors  Consultation  and Retire-ment Plan and
Supplemental Retirement Plan for the executive officers in 2000 and 1999.

Stock Option Plan
-----------------

On January 11, 1999, the Board of Directors approved, and stockholders ratified,
the  formation  of a stock  option  plan.  The plan will  provide  for  granting
incentive stock options and  nonstatutory  stock options for executive  officers
and  non-employee  directors  of the  Company.  A  total  of  23,805  shares  of
authorized  but unissued  common stock are reserved for issuance under the plan,
which expires ten years from the date of shareholder ratification. The per share
exercise  price of an option  granted  will not be less than the fair value of a
share of common stock on the date the option is granted.

On January 11, 1999, non-statutory stock options for non-employee directors were
granted  for the  purchase  of 4,760  shares and  incentive  stock  options  for
officers  and  employees  were granted for the  purchase of 11,663  shares.  The
recipients of these stock options vest over a five-year period of time.

The following table presents share data related to the outstanding options:
<TABLE>
<CAPTION>
                                                               Weighted-                              Weighted-
                                                                average                                average
                                                                Exercise                               Exercise
                                               2000              Price               1999               Price
                                         -----------------  -----------------  -----------------   -----------------
<S>                                              <C>       <C>                        <C>          <C>
     Outstanding, beginning                        16,423    $          8.50                  -      $            -
       Granted                                          -                  -             16,423                8.50
       Exercised                                        -                  -                  -                   -
       Forfeited                                        -                  -                  -                   -
                                         -----------------                     -----------------
     Outstanding, ending                           16,423    $          8.50             16,423     $          8.50
                                         =================                     =================
     Exercisable at year-end                        3,285    $          8.50                  -     $             -
                                         =================                     =================
</TABLE>

                                       27
<PAGE>

12.   EMPLOYEE BENEFITS (Continued)

Stock Option Plan (Continued)
-----------------

The following table summarizes the  characteristics of stock options at December
31, 2000:
<TABLE>
<CAPTION>
                                                Outstanding                                  Exercisable
                               -----------------------------------------------      -------------------------------
                                                                    Average                              Average
                                                    Average        Exercise                             Exercise
     Exercise Price                Shares            Life            Price              Shares            Price
     ----------------------    ---------------    ------------    ------------      ----------------   ------------

<S>   <C>                        <C>               <C>             <C>                 <C>              <C>
        $ 8.50                     16,423            8.03            $ 8.50              3,285            $ 8.50
</TABLE>

The  Company  accounts  for its stock  option  plan  under APB  Opinion  No. 25,
"Accounting for Stock Issued to Employees," and related  interpretations.  Under
this Opinion,  no  compensation  expense has been recognized with respect to the
plan because the exercise  price of the Company's  employee stock options equals
the market price of the underlying stock on the grant date.

For purposes of computing  pro forma  results,  the Company  estimated  the fair
values of stock options using the Black-Scholes  option pricing model. The model
requires the use of subjective assumptions that can materially affect fair value
estimates.  Therefore,  the pro  forma  results  are  estimates  of  results  of
operations as if  compensation  expense had been recognized for the stock option
plans.  The fair  value of each  stock  option  granted  and  vested in 2000 was
estimated using the following  weighted-average  assumptions for grants in 1999:
(1) expected  dividend  yields were zero percent;  (2) risk-free  interest rates
ranging from 4.95 percent;  (3) expected  volatility  ranging from 32.0 percent;
and (4)  expected  lives of options  ranging from 8.03 years.  Had  compensation
expense for the stock option plans been  recognized in accordance  with the fair
value accounting standards,  the effect on the Company's net income and earnings
per share for 2000 would have been insignificant.

Employee Stock Ownership Plan ("ESOP")
--------------------------------------

The Company has an ESOP for the benefit of  employees  who meet the  eligibility
requirements which include having completed one year of service with the Company
and having  attained age 21. The ESOP Trust  purchased  19,044  shares of common
stock in the initial public offering with proceeds from a loan from the Company.
The Bank makes cash  contributions  to the ESOP on an annual basis sufficient to
enable the ESOP to make the  required  loan  payments to the  Company.  The loan
bears  interest at 8.50 percent with  interest  payable  quarterly and principal
payable in equal annual  installments over ten years. The loan is secured by the
shares of the stock purchased.

As debt is  repaid,  shares  are  released  from  collateral  and  allocated  to
qualified  employees  based on the  proportion of debt service paid in the year.
The shares pledged as collateral are reported as unallocated  ESOP shares in the
consolidated balance sheet. As shares are released from collateral,  the Company
reports  compensation  expense equal to the current  market price of the shares,
and the shares become outstanding for earnings per share computations. Dividends
on  allocated  ESOP shares are  recorded as a  reduction  of retained  earnings;
dividends on unallocated ESOP shares are recorded as a reduction of debt.

Compensation  expense  for the ESOP was  $30,358 and $35,780 for the years ended
December 31, 2000 and 1999, respectively.

                                       28
<PAGE>
12.  EMPLOYEE BENEFITS (Continued)

     Employee Stock Ownership Plan ("ESOP") (Continued)
     --------------------------------------------------
<TABLE>
<CAPTION>

                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
     Allocated shares                                                                     2,856                 952

     Shares released for allocation                                                       1,904               1,904

     Unreleased shares                                                                   14,284              16,188
                                                                               -----------------   -----------------
     Total ESOP shares                                                                   19,044              19,044
                                                                               =================   =================
     Fair value of unreleased shares                                           $         82,133    $        137,598
                                                                               =================   =================
</TABLE>

Restricted Stock Plan ("RSP")
-----------------------------

In 1999,  the Board of  Directors  adopted a RSP for  directors,  officers,  and
employees.  The  objective of this 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 a 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, and have the  responsibility
to invest all funds contributed by the Bank to the Trust created for the RSP.

In 1999, the Trust purchased,  with funds  contributed by the Bank, 9,522 shares
of the  common  stock of the  Company,  of which  1,904  shares  were  issued to
directors,  and 4,948 shares were issued to officers in 1999. As of December 31,
2000, 2,670 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.

The Company granted a total of 6,852 shares of common stock on January 11, 1999,
of which,  under the plan,  shares vest over a five-year  period for  directors,
officers,  and employees beginning January 11, 2000. At December 31, 2000, there
were 1,370 shares vested.  The RSP shares  purchased  initially will be excluded
from stockholders'  equity. The Company recognizes  compensation  expense in the
amount of fair value of the common stock at the grant date,  pro rata,  over the
years  during  which the shares are payable  and  recorded as an addition to the
stockholders' equity.

Net  compensation  expense  attributable to the RSPs amounted to $16,187 for the
years ended December 31, 2000 and 1999.

13.   COMMITMENTS AND CONTINGENT LIABILITIES

Commitments
-----------

In the normal course of business, the Company makes various commitments that are
not  reflected in the  accompanying  consolidated  financial  statements.  These
instruments  involve,  to varying degrees,  elements of credit and interest rate
risk in excess of the amount  recognized in the consolidated  balance sheet. The
Company's  exposure to credit loss in the event of  nonperformance  by the other
parties to the financial  instruments is represented by the contractual  amounts
as  disclosed.  The Company  minimizes  its  exposure to credit loss under these
commitments  by subjecting  them to credit  approval and review  procedures  and
collateral  requirements as deemed necessary.  Commitments  generally have fixed
expiration dates within one year of their origination.

                                       29
<PAGE>

13.   COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

Commitments (Continued)
-----------
The off-balance sheet commitments were comprised of the following:
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
     Commitments to extend credit:
        Fixed rate commitments                                                 $        105,536    $      1,581,250
        Variable rate commitments                                                       493,600             444,588
                                                                               -----------------   -----------------
               Total commitments to extend credit                                       599,136           2,025,838
     Letters of credit                                                                   10,000                   -
                                                                               -----------------   -----------------
               Total                                                           $        609,136    $      2,025,838
                                                                               =================   =================
</TABLE>

The fixed interest rate on residential mortgage loan commitments was 8.5 percent
at December 31, 2000.

Contingent Liabilities
----------------------

In the normal  course of  business,  the Company is  involved  in various  legal
proceedings  primarily  involving the collection of outstanding  loans.  None of
these  proceedings  are  expected  to have a  material  effect on the  financial
position or operations of the Company.

14.   CAPITAL REQUIREMENTS

Federal regulations require the Company and the Bank to maintain minimum amounts
of capital.  Specifically,  each is required to maintain  certain minimum dollar
amounts  and ratios of Total and Tier I capital to  risk-weighted  assets and of
Tier I capital to average total assets.

In  addition  to  the  capital  requirements,   the  Federal  Deposit  Insurance
Corporation  Improvement  Act  ("FDICIA")  established  five capital  categories
ranging from "well  capitalized"  to "critically  undercapitalized."  Should any
institution  fail  to  meet  the  requirements  to  be  considered   "adequately
capitalized,"  it would become subject to a series of  increasingly  restrictive
regulatory actions.

As of December 31, 2000 and 1999, the Office of Thrift  Supervision  categorized
the  Bank  as  well  capitalized  under  the  regulatory  framework  for  prompt
corrective action. To be classified as a well capitalized financial institution,
Total  risk-based,  Tier 1  risk-based,  Tier 1 Leverage  capital,  and Tangible
equity capital ratios must be at least 10.0 percent,  6.0 percent,  5.0 percent,
and 1.5 percent, respectively.

The following table  reconciles the Company's  capital under generally  accepted
accounting principles to regulatory capital.
<TABLE>
<CAPTION>
                                                                                     2000                1999
                                                                               -----------------   -----------------
<S>                                                                          <C>                 <C>
     Total capital                                                             $      2,790,216    $      2,692,608
     Accumulated other comprehensive loss                                                58,460             241,366
                                                                               -----------------   -----------------
     Tier I, core, and tangible capital                                               2,848,676           2,933,974

     Allowance for loan losses                                                          180,627             187,263
                                                                               -----------------   -----------------
     Risk-based capital                                                        $      3,029,303    $      3,121,237
                                                                               =================   =================
</TABLE>

                                       30
<PAGE>



14.   CAPITAL REQUIREMENTS (Continued)

The consolidated capital position of the Company does not materially differ from
the Bank's;  therefore,  the following  table sets forth the  Company's  capital
position and minimum requirements for the years ended December 31:
<TABLE>
<CAPTION>
                                                       2000                                     1999
                                        ------------------------------------     ------------------------------------
                                             Amount             Ratio                 Amount             Ratio
                                        -----------------  -----------------     -----------------  -----------------
<S>                                   <C>                            <C>       <C>                            <C>
Total Capital
  (to Risk-weighted Assets)
  -------------------------

Actual                                  $      3,029,303               21.0 %    $      3,121,237               20.5 %
For Capital Adequacy Purposes                  1,154,259                8.0             1,216,249                8.0
To Be Well Capitalized                         1,442,824               10.0             1,520,311               10.0

Tier I Capital
  (to Risk-weighted Assets)
  -------------------------

Actual                                  $      2,848,676               19.7 %    $      2,933,974               19.3 %
For Capital Adequacy Purposes                    577,130                4.0               608,124                4.0
To Be Well Capitalized                           865,694                6.0               912,187                6.0

Core Capital
  (to Adjusted Assets)
  --------------------

Actual                                  $      2,848,676               10.6 %    $      2,933,974                9.8 %
For Capital Adequacy Purposes                  1,075,360                4.0               900,466                4.0
To Be Well Capitalized                         1,344,200                5.0             1,500,777                5.0

Tangible Capital
  (to Adjusted Assets)
  --------------------

Actual                                  $      2,848,676               10.6 %    $      2,933,974                9.8 %
For Capital Adequacy Purposes                    806,520                3.0               450,233                1.5
To Be Well Capitalized                               N/A                N/A                   N/A                N/A
</TABLE>

In accordance  with  regulations,  at the time the Bank  converted from a mutual
savings  bank to a stock  savings  bank,  a portion  of  retained  earnings  was
restricted by establishing a liquidation  account.  The liquidation account will
be  maintained  for the benefit of  eligible  account  holders  who  continue to
maintain  their  accounts  at the Bank  after the  Conversion.  The  liquidation
account will be reduced  annually to the extent that  eligible  account  holders
have reduced their qualifying deposits. Subsequent increases will not restore an
eligible account holder's interest in the liquidation account. In the event of a
complete  liquidation  of the Bank,  each  account  holder  will be  entitled to
receive a distribution from the liquidation  account in an amount  proportionate
to the current adjusted qualifying balances for accounts then held.

                                       31
<PAGE>

15.   FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company's financial instruments at December 31,
are as follows:
<TABLE>
<CAPTION>
                                                        2000                                   1999
                                         ------------------------------------  -------------------------------------
                                             Carrying             Fair             Carrying              Fair
                                              Value              Value              Value               Value
                                         -----------------  -----------------  -----------------   -----------------
<S>                                    <C>                <C>                <C>                 <C>
Financial assets:
     Cash and due from banks,
        interest-bearing deposits
        in other banks                   $        802,288   $        802,288   $        790,785    $        790,785
     Certificates of deposit in
        other banks                               100,000            100,000            100,000             100,000
     Investment securities:
           Available for sale                   1,249,382          1,249,382          3,323,894           3,323,894
           Held to maturity                             -                  -            145,000             144,870
     Mortgage-backed securities:
           Available for sale                     609,050            609,050            690,164             690,164
           Held to maturity                       613,823            618,846            743,385             750,369
     Loans receivable                          22,385,789         22,911,000         22,518,456          21,624,939
     Accrued interest receivable                  135,412            135,412            180,797             180,797
     FHLB stock                                   287,500            287,500            564,900             564,900
                                         -----------------  -----------------  -----------------   -----------------
        Total                            $     26,183,244   $     26,713,478   $     29,057,381    $     28,170,718
                                         =================  =================  =================   =================

Financial liabilities:
     Deposits                            $     17,498,223   $     17,607,000   $     16,551,544    $     16,369,247
     Borrowed funds                             5,750,000          5,633,000          9,537,500           9,354,042
     Advances by borrowers
        for taxes and insurance                   265,073            265,073            275,758             275,758
     Accrued interest payable                      39,007             39,007            150,202             150,202
                                         -----------------  -----------------  -----------------   -----------------
        Total                            $     23,552,303   $     23,544,080   $     26,515,004    $     26,149,249
                                         =================  =================  =================   =================
</TABLE>

Financial  instruments are defined as cash, evidence of an ownership interest in
an entity,  or a contract  which  creates an  obligation  or right to receive or
deliver  cash or  another  financial  instrument  from/to  a  second  entity  on
potentially favorable or unfavorable terms.

Fair value is defined as the  amount at which a  financial  instrument  could be
exchanged  in a current  transaction  between  willing  parties  other than in a
forced  or  liquidation  sale.  If a  quoted  market  price is  available  for a
financial  instrument,  the estimated fair value would be calculated  based upon
the market price per trading unit of the instrument.

If no readily  available  market exists,  the fair value estimates for financial
instruments are based upon  management's  judgment  regarding  current  economic
conditions,  interest rate risk,  expected cash flows,  future estimated losses,
and other factors as  determined  through  various  option  pricing  formulas or
simulation modeling.  As many of these assumptions result from judgments made by
management  based upon estimates which are inherently  uncertain,  the resulting
estimated fair values may not be indicative of the amount realizable in the sale
of a particular financial instrument. In addition, changes in the assumptions on
which the estimated  fair values are based may have a significant  impact on the
resulting estimated fair values.

As certain assets,  such as deferred tax assets and premises and equipment,  are
not  considered  financial  instruments,  the estimated  fair value of financial
instruments would not represent the full value of the Company.

                                       32
<PAGE>

15.   FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The Company employed simulation modeling in determining the estimated fair value
of financial instruments for which quoted market prices were not available based
upon the following assumptions:

Cash and Due from Banks,  Interest-bearing Deposits in Other Banks, Certificates
--------------------------------------------------------------------------------
of Deposit in Other Banks, Accrued Interest Receivable,  FHLB Stock, Advances by
--------------------------------------------------------------------------------
Borrowers for Taxes and Insurance, and Accrued Interest Payable
---------------------------------------------------------------

The fair value is equal to the current carrying value.

Investment and Mortgage-backed Securities
-----------------------------------------

The fair  value of these  securities  is equal to the  available  quoted  market
price. If no quoted market price is available, fair value is estimated using the
quoted market price for similar securities.

Loans Receivable, Deposits, and Borrowed Funds
----------------------------------------------

The fair value of loans is estimated by discounting  the future cash flows using
a simulation  model which estimates  future cash flows based upon current market
rates adjusted for prepayment risk and credit quality.  Savings,  checking,  and
money market  deposit  accounts are valued at the amount payable on demand as of
year-end. Fair values for time deposits and borrowed funds are estimated using a
discounted cash flow calculation that applies  contractual costs currently being
offered in the  existing  portfolio to current  market  rates being  offered for
deposits and borrowings of similar remaining maturities.

Commitments to Extend Credit
----------------------------

These  financial  instruments  are generally not subject to sale,  and estimated
fair values are not readily  available.  The carrying value,  represented by the
net deferred fee arising from the unrecognized  commitment,  and the fair value,
determined by  discounting  the remaining  contractual  fee over the term of the
commitment  using fees currently  charged to enter into similar  agreements with
similar credit risk, are not considered material for disclosure. The contractual
amounts of unfunded commitments are presented in Note 13.

                                       33
<PAGE>

16.  CONDENSED FINANCIAL  INFORMATION OF CARNEGIE FINANCIAL  CORPORATION (PARENT
     COMPANY ONLY)


                             CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                              2000                     1999
                                                                      ----------------------   ----------------------
<S>                                                                 <C>                      <C>
ASSETS
     Cash and due from banks                                          $             107,063    $             145,546
     Investment securities available for sale                                             -                  233,146
     Investment in subsidiary bank                                                2,717,239                2,234,680
     Loan receivable from ESOP                                                      140,926                  161,874
     Other assets                                                                         -                   78,597
                                                                      ----------------------   ----------------------
                   TOTAL ASSETS                                       $           2,965,228    $           2,853,843
                                                                      ======================   ======================
                  LIABILITIES AND STOCKHOLDERS' EQUITY
     Dividends payable                                                $                   -    $              22,478
     RSP payable                                                                     57,640                   64,750
     Other liabilities                                                              117,372                   74,007
     Stockholders' equity                                                         2,790,216                2,692,608
                                                                      ----------------------   ----------------------
TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                                             $           2,965,228    $           2,853,843
                                                                      ======================   ======================
</TABLE>


                          CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                              2000                     1999
                                                                      ----------------------   ----------------------
<S>                                                                 <C>                      <C>
INCOME
     Interest income                                                  $              17,090    $              30,304

EXPENSES                                                                             23,268                   43,330
                                                                      ----------------------   ----------------------
Loss before equity in undistributed
  earnings of subsidiary                                                             (6,178)                 (13,026)

Equity in undistributed earnings of subsidiary
                                                                                   (102,219)                 121,256
                                                                      ----------------------   ----------------------
NET INCOME (LOSS)                                                     $            (108,397)   $             108,230
                                                                      ======================   ======================
</TABLE>

                                       34
<PAGE>



16.  CONDENSED FINANCIAL  INFORMATION OF CARNEGIE FINANCIAL  CORPORATION (PARENT
     COMPANY ONLY) (Continued)


                        CONDENSED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                                          2000         1999
                                                                       ---------    ---------

OPERATING ACTIVITIES
<S>                                                                  <C>          <C>
     Net income (loss)                                                 $(108,397)   $ 108,230
     Adjustments  to  reconcile  net  income  (loss)  to
        net  cash  provided  by operating activities:
            Equity in undistributed loss (income) of subsidiary          102,219     (121,256)
            Other, net                                                   (52,334)      77,038
                                                                       ---------    ---------
                Net cash provided by (used for) operating activities     (58,512)      64,012
                                                                       ---------    ---------
INVESTING ACTIVITIES
     Maturity of investment securities available for sale                250,000         --
     Additional investment at subsidiary bank                           (250,919)    (350,000)
     Payments from ESOP                                                   20,948       19,044
                                                                       ---------    ---------
                Net cash provided by (used for) investing activities      20,029     (330,956)
                                                                       ---------    ---------
FINANCING ACTIVITIES
     Common stock acquired by RSP                                              -      (80,937)
     Purchase of treasury stock, at cost                                       -     (129,506)
                                                                       ---------    ---------
                Net cash used for financing activities                         -     (210,443)
                                                                       ---------    ---------
                Decrease in cash                                         (38,483)    (477,387)

CASH AT BEGINNING OF PERIOD                                              145,546      622,933
                                                                       ---------    ---------

CASH AT END OF PERIOD                                                  $ 107,063    $ 145,546
                                                                       =========    =========
</TABLE>

                                       35