SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
(Mark One)
     (X)         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended September 30, 2001

                                       OR

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

                          Commission File Number 0-631

                            WEBFINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

             Delaware                                              56-2043000
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

                        150 East 52nd Street, 21st Floor
                            New York, New York 10022
              (Address and zip code of principal executive offices)

                                  877-431-2942
              (Registrant's telephone number, including area code)


            Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes (X) No ( )

            Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes (X) No ( )

            As of November 13, 2001, 4,366,866 shares of the issuer's Common
Stock, $.001 par value (the "Common Stock") were issued and outstanding.






                                Table of Contents

                                                                        Page No.
                                                                        --------

                          Part I Financial Information

Item 1.  Consolidated Financial Statements:

         Consolidated Statements of Financial Condition
         September 30, 2001 (unaudited) and December 31, 2000                 2

         Consolidated Statements of Operations
         for the three months ended September 30, 2001 and 2000 (unaudited)   4

         Consolidated Statements of Operations
         for the nine months ended September 30, 2001 and 2000 (unaudited)    5

         Consolidated Statements of Cash Flow
         for the nine months ended September 30, 2001 and 2000 (unaudited)    6

         Notes to Consolidated Financial Statements (unaudited)               8

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          11

                         Part II Other Information

Item 6.  Exhibits and Reports on Form 8-K                                    12

Signatures                                                                   13







PART I  FINANCIAL INFORMATION

Item 1.     Consolidated Financial Statements

                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                  (Amounts in thousands except per share data)

                                                           September 30, 2001   December 31, 2000
                                                           ------------------   -----------------
                                                             (unaudited)
                             Assets
Cash and due from banks                                        $ 5,028               $ 6,086
Federal funds sold                                                --                      76
                                                               -------               -------
      Total cash and cash equivalents                            5,028                 6,162

Investment securities
       Held-to-maturity (estimated fair value $28 and $32
            at September 30, 2001 and December 31, 2000)            27                    32
       Available-for-sale                                          334                   463
                                                               -------               -------
            Total investment securities                            361                   495

Loans, net of deferred income and fees                          13,059                12,131
Less allowance for loan loss                                     1,981                 1,077
                                                               -------               -------
            Total loans, net                                    11,078                11,054

Premises and equipment,
        net of accumulated depreciation and amortization            87                   110
Accrued interest receivable                                         94                   113
Goodwill, net of accumulated
        amortization of $365 in 2001 and $276 in 2000            1,409                 1,498
Other assets                                                     1,075                 5,363
                                                               -------               -------

                                                               $19,132               $24,795
                                                               =======               =======


Liabilities and Stockholders' Equity
Deposits:
        Non interest-bearing demand                            $    75               $   250
        Interest-bearing:
            Savings and money market                                 9                  --
            Certificates of deposit                              5,219                 9,882
                                                               -------               -------
                  Total deposits                                 5,303                10,132
        Other borrowings                                           841                  --
        Other liabilities                                          264                   779
                                                               -------               -------
            Total liabilities before minority interests          6,408                10,911

Commitments and contingencies                                     --                    --

Minority interests                                                 388                   460

                                   (continued)

                                       2



                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)
                  (Amounts in thousands except per share data)

                                                                  September 30, 2001  December 31, 2000
                                                                  ------------------  -----------------
                                                                    (unaudited)
 Stockholders' Equity
      Preferred stock, 10,000,000 shares authorized, none issued       --                     --
      Common stock, 50,000,000 shares authorized;
         $.001 par value, 4,366,866 and 4,354,280 shares issued
         and outstanding at September 30, 2001 and
         December 31, 2000, respectively                                  4                      4
      Paid-in capital                                                36,606                 36,559
      Accumulated other comprehensive loss                               (1)                  --
      Accumulated deficit                                           (24,273)               (23,139)
                                                                   --------               --------
            Total stockholders' equity                               12,336                 13,424
                                                                   --------               --------
                                                                   $ 19,132               $ 24,795
                                                                   ========               ========


          See accompanying notes to consolidated financial statements.

                                       3





                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 (Amounts in thousands except per share amounts)

                                                                                For the Three Months Ended
                                                                        September 30, 2001      September 30, 2000
                                                                        ------------------      ------------------
Interest income
      Interest and fees on loans                                            $   260                  $   509
      Interest on cash equivalents                                               45                      143
      Interest on federal funds sold                                              1                     --
      Interest on investment securities                                           8                      116
                                                                            -------                  -------
            Total interest income                                               314                      768

Interest expense                                                                 66                      298
                                                                            -------                 --------
                  Net interest income before provision for
                  loan losses                                                   248                      470

Provision for loan losses                                                        49                      163
                                                                            -------                 --------
                   Net interest income after provision for
                   loan losses                                                  199                      307
                                                                            -------                 --------

Noninterest income
      Gain on sale of loans                                                    --                        365
      Fee income                                                                 90                      476
      Miscellaneous income                                                      104                      126
                                                                            -------                 --------
            Total noninterest income                                            194                      967

Noninterest expenses
      Salaries, wages, and benefits                                             319                      482
      Professional and legal fees                                               144                      130
      Occupancy expense                                                          50                       48
      Amortization of goodwill                                                   30                       30
      Other general and administrative                                          182                      298
                                                                            -------                 --------
            Total noninterest expenses                                          725                      988
                                                                            -------                 --------
                  Operating income (loss)                                      (332)                     286

Income tax expense                                                                3                     --
                                                                            -------                 --------

      Income (loss) before minority interests                                  (335)                     497

Loss attributable to minority interests                                          17                     --
                                                                            -------                 --------

      Net income (loss)                                                     $  (318)                 $   286
                                                                            =======                 ========

Basic and diluted net income (loss) per share                               $  (.07)                 $  . 07
Weighted average number of common shares and
  common share equivalents, basic                                             4,367                    4,354
Weighted average number of common shares and
  common share equivalents, diluted                                           4,367                    4,386

          See accompanying notes to consolidated financial statements.

                                       4




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                 (Amounts in thousands except per share amounts)

                                                                                   For the Nine Months Ended
                                                                          September 30, 2001       September 30, 2000
                                                                          ------------------       ------------------
Interest income
      Interest and fees on loans                                            $   995                   $ 1,199
      Interest on cash equivalents                                              187                       347
      Interest on federal funds sold                                             42                      --
      Interest on investment securities                                          24                       175
                                                                            -------                   -------
            Total interest income                                             1,248                     1,721

Interest expense                                                                340                       601
                                                                            -------                   -------
                  Net interest income before provision for
                  loan losses                                                   908                     1,120

Provision for loan losses                                                       915                       428
                                                                            -------                   -------
                   Net interest income (loss) after provision for
                   loan losses                                                   (7)                      692
                                                                            -------                   -------

Noninterest income
      Gain on sale of loans                                                     219                       924
      Fee income                                                                422                     1,149
      Miscellaneous income                                                      454                       655
                                                                            -------                   -------
            Total noninterest income                                          1,095                     2,728

Noninterest expenses
      Salaries, wages, and benefits                                             920                     1,423
      Professional and legal fees                                               432                       445
      Occupancy expense                                                         148                       142
      Amortization of goodwill                                                   89                        88
      Other general and administrative                                          694                       844
                                                                            -------                   -------
            Total noninterest expenses                                        2,283                     2,942
                                                                            -------                   -------
                  Operating income (loss)                                    (1,195)                      478

Income tax expense                                                               11                      --
                                                                            -------                   -------

      Income (loss) before minority interests                                (1,206)                      478

Loss (income) attributable to minority interests                                 72                       (53)
                                                                            -------                   -------

      Net income (loss)                                                     $(1,134)                  $   425
                                                                            =======                   =======

Basic net income (loss) per share                                           $  (.26)                  $   .10
Diluted net income (loss) per share                                         $  (.26)                  $   .09
Weighted average number of common shares and
  common share equivalents, basic                                             4,367                     4,354
Weighted average number of common shares and
  common share equivalents, diluted                                           4,367                     4,696

           See accompanying notes to consolidated financial statements

                                       5




                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
                             (Amounts in thousands)

                                                                      For the Nine Months Ended
                                                                 September 30, 2001     September 30, 2000
                                                                 ------------------     ------------------
Cash flows from operating activities:
Net income (loss)                                                    $(1,134)               $   425
Adjustments to reconcile net income (loss) to net cash
 provided by (used in) operating activities:
      Minority interests                                                 (72)                    53
      Depreciation and amortization                                       35                     40
      Gain on sale of loans                                             (219)                   924
      Common stock granted in lieu of cash                                47                     46
      Provision for loan losses                                          915                    428
      Amortization/(accretion) of loan income and fees, net              (70)                    48
      Amortization of goodwill                                            89                     88
      Amortization of servicing assets                                    62                    (64)
Changes in operating assets and liabilities:
      Accounts receivable                                               --                       14
       Prepaid expenses                                                 --                       17
       Accrued interest receivable                                        19                   (239)
       Other assets                                                      (24)                (2,913)
       Other liabilities                                                (515)                 1,617
                                                                     -------                -------
          Net cash provided by (used in) operating activities           (867)                   484

Cash flows from investing activities:
      Principal payments received on held-to-maturity securities           5                   --
      Principal payments received on available-for-sale securities       128                      4
      Purchase of available-for-sale securities                         --                   (5,487)
      Purchase of property and equipment                                 (12)                   (58)
      Reduction of minority interest                                    --                       34
      Cash received on settlement of loan sale                         4,250                   --
      Loans originated and principal collections, net                   (650)                (2,989)
                                                                     -------                -------
          Net cash provided by (used in) investing activities          3,721                 (8,496)

Cash flows from financing activities:
      Net increase (decrease) in noninterest bearing deposits           (175)                  --
      Net increase (decrease) in savings and money market deposits         9                   --
      Net increase (decrease) in certificates of deposit              (4,663)                 9,315
      Net increase (decrease) in short term borrowings                   841                 (1,100)
                                                                     -------                -------
         Net cash provided by (used in) financing activities          (3,988)                 8,215


                                   (continued)

                                       6





                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
                             (Amounts in thousands)

                                                                       For the Nine Months Ended
                                                            September 30, 2001          September 30, 2000
                                                            ------------------          ------------------



Net increase (decrease) in cash and cash equivalents              (1,134)                          203

Cash and cash equivalents at beginning of period                   6,162                         7,266
                                                                 -------                       -------

Cash and cash equivalents at end of period                       $ 5,028                       $ 7,469
                                                                 =======                       =======




Supplemental disclosure of additional cash activities:
      Cash paid for interest                                     $   501                       $   333
      Cash paid for income taxes                                 $    11                       $  --

Noncash investing and financing activities:
      At September 30, 2001, the Company had a net unrealized loss on
available-for-sale securities of $1. As a result, an accumulated other
comprehensive loss of $1 was recorded in the stockholders' equity section of the
consolidated statements of financial condition at September 30, 2001.

          See accompanying notes to consolidated financial statements.

                                       7





                    WEBFINANCIAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
           (All numbers except shares and per share data in thousands)

1.          SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Basis of Presentation--The accompanying interim consolidated
financial statements of WebFinancial Corporation and its subsidiaries (the
"Company") are unaudited and have been prepared in conformity with the
requirements of Regulation S-X promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), particularly Rule 10-01 thereof, which
governs the presentation of interim financial statements. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles. The accompanying interim consolidated financial
statements should be read in conjunction with the Company's significant
accounting policies as set forth in Note 1 to the consolidated financial
statements in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 (the "2000 10-K"). The consolidated Statement of Financial
Condition at December 31, 2000 was extracted from the Company's audited
consolidated financial statements contained in the 2000 10-K, and does not
include all disclosures required by generally accepted accounting principles for
annual consolidated financial statements.

            In the opinion of management, all adjustments are comprised of
normal recurring accruals necessary for the fair presentation of the interim
financial statements. Operating results for the quarter ended September 30, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001.

2.          ORGANIZATION AND RELATIONSHIPS

            The consolidated financial statements include the financial
statements of WebFinancial Corporation and its subsidiaries: WebFinancial
Holding Corporation, a wholly owned subsidiary of the Company ("Holdings"),
WebBank ("WebBank"), Praxis Investment Advisers, Inc. ("Praxis"), WebFinancial
Government Lending, Inc. ("Lending"), and Web Film Financial, Inc. ("Film"),
collectively referred to as the Company. WebBank is a Utah-chartered industrial
loan corporation, and is subject to comprehensive regulation, examination, and
supervision by the Federal Deposit Insurance Corporation ("FDIC"), and the State
of Utah Department of Financial Institutions. WebBank provides commercial and
consumer specialty finance services.

                                       8





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

                The following discussion should be read in conjunction with the
consolidated financial statements of the Company and the notes thereto presented
elsewhere herein.

CHANGES IN RESULTS OF OPERATIONS
Three Months Ended September 30, 2001 Compared to Three Months Ended
September 30, 2000

                The net loss for the quarter ended September 30, 2001 was
$318,000 or $(.07) per share compared to net income of $286,000 or $.07 per
share for the same period in 2000.

                Net interest income after provision for loan losses decreased by
$108,000 between the two periods primarily due to decreased loan activity. An
increase in nonaccrual loans and falling interest rates in 2001, partially
offset by a $114,000 decrease in provision for loan losses, generated the
decline in net interest income.

                Noninterest income decreased by $773,000 between the two
periods. Tightened credit standards at WebBank resulted in a decrease in new
loan volume and a corresponding decrease in gain on sale of loans of $365,000.
Fee income declined by $386,000 due in large part to the discontinuance of
WebBank's payday lending program and the loss of a WebBank private label credit
card relationship. Fee income was enhanced by the addition of new student loan
and medical savings account programs begun in the third quarter of 2001.

                Noninterest expense decreased by $263,000 between the two
periods. The salary, wages, and benefits expense reduction of $163,000 was
mostly attributable to the lack of a bonus accrual in 2001.

CHANGES IN RESULTS OF OPERATIONS
Nine Months Ended September 30, 2001 Compared to Nine Months Ended
September 30, 2000

                The net loss for the nine months ended September 30, 2001 was
$1,134,000 or $(.26) per share on a basic and diluted basis compared to net
income of $425,000 or $.10 and $.09 per share on a basic and diluted basis,
respectively, for the same period in 2000.

                Net interest income after provision for loan losses decreased by
$699,000 between the two periods. Most of the difference was due to a $487,000
increase in the provision for loan losses.

                Noninterest income decreased by $1,633,000 between the two
periods. The gain on sale of loans decreased by $705,000 due to tightened credit
standards. Fee income declined by $727,000 due in large part to the
discontinuance of WebBank's payday lending program and the loss of a WebBank
private label credit card relationship. Miscellaneous income decreased by
$201,000 primarily because of a one-time loan securitization fee of $383,000
earned by WebBank in 2000.

                Noninterest expense decreased by $659,000 between the two
periods. A $503,000 decrease in salaries, wages, and benefits expense was
primarily attributable to a reduction in the level of staffing at Lending and
lack of a bonus accrual at WebBank in 2001.

CHANGES IN FINANCIAL CONDITION
September 30, 2001 Compared to December 31, 2000

                Total assets decreased by $5,663,000 between the two dates due
primarily to a $4,288,000 reduction in other assets. The large balance in other
assets at December 31, 2000 resulted from a loan that was sold by WebBank under
contract a few days before year-end and was settled a few days after year-end.
The allowance for loan losses increased by $904,000 due to downgrades of several
loans in the WebBank USDA B&I portfolio. Nonaccrual loans on the consolidated
statements of financial condition, those for which interest income is not being
recorded and which are included in loans, net of deferred income, increased from
$0 at December 31, 2000 to $2,311,000 at September 30, 2001.

                                       9





                Total liabilities before minority interests decreased by
$4,503,000 between the two dates primarily due to the maturity of $4,663,000 of
certificates of deposit at WebBank that were not renewed because of decreased
loan activity. Other liabilities decreased during the first nine months of 2001
by $515,000 primarily due to the payment of accounts payable and taxes payable
that were accrued at December 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

                Liquidity generally comes from either short-term assets such as
cash or funding sources such as borrowings. At September 30, 2001 and December
31, 2000, the Company's cash and cash equivalents totaled $5,028,000 and
$6,162,000, respectively. Funding for the Company is obtained primarily from
WebBank certificates of deposit obtained through brokers and from a WebBank
$2,500,000 federal funds purchased line with a local correspondent bank. WebBank
is currently developing a program to secure a less expensive and more dependable
source of funds than the brokered certificates of deposit provide. Management
believes that the Company's current cash and cash equivalent balances, expected
operating cash flows, and available credit lines are adequate to meet its
liquidity needs through at least the next 12 months.

                The Company continues to actively seek acquisition transactions.
There can be no assurance that the Company will be able to acquire an additional
business, or that such business will be profitable. In order to finance an
acquisition, the Company may be required to incur or assume indebtedness or
issue securities.

FORWARD-LOOKING STATEMENTS

                The following important factors, among others, could cause
actual results to differ materially from those indicated by forward-looking
statements made in this Quarterly Report of Form 10-Q and presented elsewhere by
management. All forward-looking statements included in this document are based
on information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward-looking statements. A number of
uncertainties exist that could affect the Company's future operating results,
including, without limitation, general economic conditions, changes in interest
rates, the Company's ability to attract deposits, and the Company's ability to
control costs. Because of these and other factors, past financial performance
should not be considered an indication of future performance. The Company's
future quarterly operating results may vary significantly. Investors should not
use historical trends to anticipate future results and should be aware that the
trading price of the Company's Common Stock may be subject to wide fluctuations
in response to quarterly variations in operating results and other factors,
including those discussed above.

                                       10





Item 3.     Quantitative and Qualitative Disclosures about Market Risk

            The Company maintains an investment portfolio and participates with
other lenders in commercial loan programs. Both of these activities are subject
to specific policies that are focused on preserving principal, maintaining
proper liquidity to meet operating needs, and maximizing yields.

            The Company's operations may be subject to a variety of market
risks, the most material of which is the risk of changing interest rates.
Generally, interest rate risk is the volatility in financial performance
attributable to changes in market interest rates, which may result in either
fluctuation of net interest income or changes to the economic value of the
equity of the Company. The following discusses certain factors that may affect
the Company's financial results and operations and should be considered in
evaluating the Company.

            Interest Rates. The Company's earnings may be impacted by changing
interest rates. Changes in interest rates impact the level of loans, deposits
and investments, the credit profile of existing loans, the rates received on
loans and securities and the rates paid on deposits and borrowings. The Company
attempts to minimize interest rate risk through various means including the
matching of interest rate volatility of assets and liabilities. However,
significant fluctuations in interest rates may have an adverse effect on the
Company's financial condition and results of operations.

            Government Regulation and Monetary Policy. The banking industry is
subject to extensive federal and state supervision and regulation. Significant
new laws or changes in existing laws, or repeals of existing laws may cause the
Company's results to differ materially. Further, federal monetary policy,
particularly as implemented through the Federal Reserve System, significantly
affects credit conditions for the Company and a material change in these
conditions could have a material adverse impact on the Company's financial
condition and results of operations.

            Competition. The banking and financial services businesses in the
Company's lines of business are highly competitive. The increasingly competitive
environment is a result of changes in regulation, changes in technology and
product delivery systems, and the accelerating pace of consolidation among
financial service providers. The results of the Company may differ if
circumstances affecting the nature or level of competition change.

            Credit Quality. A source of risk arises from the possibility that
losses will be sustained because borrowers, guarantors and related parties may
fail to perform in accordance with the terms of their loans. The Company has
adopted underwriting and credit monitoring procedures and credit policies,
including the establishment and review of the allowance for credit losses, that
management believes are appropriate to minimize this risk by assessing the
likelihood of nonperformance, tracking loan performance and diversifying the
Company's credit portfolio. These policies and procedures, however, may not
prevent unexpected losses that could have a material adverse effect on the
Company's results.

            Non-banking Activities. The Company may expand its operations into
new non-banking activities in 2001. Although the Company has experience in
providing bank-related services, this expertise may not assist us in our
expansion into non-banking activities. As a result, we may be exposed to risks
associated with, among other things, (1) a lack of market and product knowledge
or awareness of other industry related matters and (2) an inability to attract
and retain qualified employees with experience in these non-banking activities.

            Proposed Legislation. From time to time, various types of federal
and state legislation have been proposed that could result in additional
regulation of, and modifications of restrictions on, the business of the
Company. It cannot be predicted whether any legislation currently being
considered will be adopted or how such legislation or any other legislation that
might be enacted in the future would affect the business of the Company.

                                       11





PART II  OTHER INFORMATION

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

            (a)      Exhibits
                     See exhibit index immediately following the signature page.

            (b)      Reports on Form 8-K during the quarter
                     None.

                                       12





                                   SIGNATURES


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


Date:  November 13, 2001        WebFinancial Corporation


                               By:  /s/ Warren G. Lichtenstein
                                    ----------------------------------------
                                    Warren G. Lichtenstein
                                    President and Chief Executive Officer



                               By:  /s/ Glen M. Kassan
                                    ----------------------------------------
                                    Glen M. Kassan
                                    Vice President and Chief Financial Officer



                                       13





                                  EXHIBIT INDEX


11          Statement Regarding Computation of Net Loss Per Share