<PAGE>   1
                                  UNITED STATES
                       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 JUNE 30, 1999

                                       OR

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

For the transition period from                       to
                              -----------------------  ------------------------
Commission file number    000-23887

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

              MICHIGAN                                   38-2603955
   (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                    Identification No.)

                       30600 TELEGRAPH ROAD, FOURTH FLOOR
                             BINGHAM FARMS, MICHIGAN
                                      48025
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (248) 540-8000
              (Registrant's telephone number, including area code)

-------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)

         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 | |

       Number of common shares outstanding as of July 30, 1999: 14,843,654


<PAGE>   2

                           ROCK FINANCIAL CORPORATION

                                Table of Contents

<TABLE>
<CAPTION>

                                                                                                                Page
                                                                                                               Number
                                                                                                               ------
<S>                                                                                                            <C>
PART I--FINANCIAL INFORMATION.....................................................................................3
         ITEM 1.  FINANCIAL STATEMENTS............................................................................3
                  CONSOLIDATED BALANCE SHEETS.....................................................................3
                  CONSOLIDATED STATEMENTS OF INCOME...............................................................4
                  CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY..................................................5
                  CONSOLIDATED STATEMENTS OF CASH FLOWS...........................................................6
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS......................................................7
         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..........12
         ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................................36


PART II--OTHER INFORMATION.......................................................................................38
         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................38
         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K...............................................................38


SIGNATURES.......................................................................................................39
</TABLE>



<PAGE>   3
                         PART I--FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                           ROCK FINANCIAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 1998 AND JUNE 30, 1999

<TABLE>
<CAPTION>

                                                                                December 31,              June 30,
                                                                                    1998                    1999
                                                                                ------------             -----------
ASSETS                                                                                                   (Unaudited)
<S>                                                                             <C>                     <C>
Cash and cash equivalents ...................................................... $ 30,081,524            $ 35,405,660
Mortgage loans held for sale ...................................................  155,631,112              81,916,736
Mortgage loans held for investment (net of allowance for
     losses of $634,851 and $1,272,085 at December 31,
     1998 and June 30, 1999, respectively) .....................................    3,766,171               2,977,711
Real estate owned ..............................................................       49,989                 497,113
Shareholders' advances .........................................................      994,372
Property and equipment (net of accumulated depreciation of
     $5,400,480 and $6,192,468 at December 31, 1998 and
     June 30, 1999, respectively) ..............................................   10,775,733               9,828,493
Deferred income taxes ..........................................................    1,945,000                 900,000
Prepaid federal income tax .....................................................    3,792,272
Other assets ...................................................................    1,193,552               2,027,221
                                                                                 ------------            ------------

Total assets ................................................................... $204,437,453            $137,345,206
                                                                                 ============            ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
     Warehouse line of credit .................................................. $ 98,008,105            $ 29,896,091
     Reverse repurchase agreement ..............................................   11,521,065
     Drafts payable ............................................................   44,021,087              49,168,873
     Accounts payable ..........................................................    4,680,275               3,134,851
     Accrued expenses and other liabilities ....................................    8,171,773               5,479,788
                                                                                 ------------            ------------
         Total liabilities .....................................................  166,402,305              87,679,603
                                                                                 ------------            ------------

Minority interest in subsidiary ................................................                              215,102

Shareholders' equity:
     Common shares, $.01 par value. Authorized 50,000,000
         shares; issued and outstanding 13,590,500 shares
         and 14,784,900 shares at December 31, 1998 and
         June 30, 1999, respectively ...........................................      135,905                 147,849
     Additional paid-in capital ................................................   26,297,782              36,124,511
     Retained earnings .........................................................   11,601,461              13,178,141
                                                                                 ------------            ------------
         Total shareholders' equity ............................................   38,035,148              49,450,501
                                                                                 ------------            ------------

Total liabilities and shareholders' equity ..................................... $204,437,453            $137,345,206
                                                                                 ============            ============
</TABLE>



                                                              Page 3 of 39 pages
<PAGE>   4

                           ROCK FINANCIAL CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
            THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                   For the Three-Month        For the Six-Month
                                                                                  Periods Ended June 30,     Periods Ended June 30,
                                                                                 ------------------------  ------------------------
                                                                                     1998         1999        1998         1999
                                                                                 -----------  -----------  -----------  ------------
<S>                                                                             <C>          <C>          <C>          <C>
      Revenue:
           Interest income ...................................................   $ 3,128,445  $ 1,886,709  $ 6,227,712  $ 4,912,832
           Interest expense ..................................................     1,882,191      613,321    3,619,827    2,032,259
                                                                                 -----------  -----------  -----------  -----------
               Net interest margin ...........................................     1,246,254    1,273,388    2,607,885    2,880,573
           Provision for credit losses .......................................       135,240      113,012      249,710      683,559
                                                                                 -----------  -----------  -----------  -----------
               Net interest margin after  provision  for
                   credit losses .............................................     1,111,014    1,160,376    2,358,175    2,197,014
           Loan fees and gains on sale of mortgages ..........................    20,976,499   15,518,744   38,639,830   34,535,018
           Other income (expense) ............................................         7,315      (12,195)      17,734        2,625
                                                                                 -----------  -----------  -----------  -----------
                                                                                  22,094,828   16,666,925   41,015,739   36,734,657
                                                                                 -----------  -----------  -----------  -----------
      Expenses:
           Salaries, commissions and employee  benefits ......................     9,650,074   11,112,349   18,196,241   20,588,596
           General and administrative expenses ...............................     3,267,659    3,594,154    6,097,754    7,017,514
           Marketing expenses ................................................     3,560,772    2,221,316    6,460,478    4,595,593
           Depreciation and amortization .....................................       509,395      622,877    1,052,050    1,260,060
                                                                                 -----------  -----------  -----------  -----------
                                                                                  16,987,900  $17,550,696   31,806,523   33,461,763
                                                                                 -----------  -----------  -----------  -----------
           Income (loss) before income taxes and minority
              interest .......................................................     5,106,928     (883,771)   9,209,216    3,272,894
           Minority interest in loss of subsidiary ...........................                     84,898                    84,898
           Income tax (expense) benefit ......................................    (1,123,524)     288,000   (1,123,524)  (1,209,000)
           Income tax benefit due to conversion of
              "S" Corp. ......................................................       950,939                  950,939
                                                                                 -----------  -----------  -----------  -----------
               Net income (loss) .............................................   $ 4,934,343  $  (510,873) $ 9,036,631  $ 2,148,792
                                                                                 ===========  ===========  ===========  ===========
      Pro forma information (note 5):
           Income before income taxes ........................................   $ 5,106,928               $ 9,209,216
           Provision for pro forma income taxes ..............................     1,736,356                 3,131,133
                                                                                 -----------               -----------
           Pro forma net income ..............................................   $ 3,370,572               $ 6,078,083
                                                                                 ===========               ===========
      Pro forma earnings (loss) per share /earnings (loss) per share (1999):
           Basic .............................................................   $      0.24  $     (0.03) $      0.44  $      0.15
                                                                                 ===========  ===========  ===========  ===========
           Diluted ...........................................................   $      0.23  $     (0.03) $      0.41  $      0.14
                                                                                 ===========  ===========  ===========  ===========
      Dividends declared per share ...........................................   $      0.02  $      0.02  $      0.02  $      0.04
                                                                                 ===========  ===========  ===========  ===========
      Pro forma weighted average number of shares outstanding/Weighted average
      number of shares outstanding (1999):
           Basic .............................................................    13,829,500   14,693,862   13,829,500   14,244,695
                                                                                 ===========  ===========  ===========  ===========
           Diluted ...........................................................    14,945,181   15,537,343   14,945,181   15,175,691
                                                                                 ===========  ===========  ===========  ===========
</TABLE>


                                                              Page 4 or 39 pages
<PAGE>   5
                           ROCK FINANCIAL CORPORATION
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                         SIX MONTHS ENDED JUNE 30, 1999
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 ADDITIONAL                        TOTAL
                                                                  COMMON          PAID-IN         RETAINED      SHAREHOLDERS'
                                                                   SHARES         CAPITAL         EARNINGS         EQUITY
                                                                ------------    ------------    ------------   --------------
<S>                                                            <C>             <C>             <C>            <C>
Balance January 1, 1999 ......................                  $    135,905    $ 26,297,782    $ 11,601,461   $ 38,035,148
Net income ...................................                                                     2,148,792      2,148,792
Cash dividends ($.04 per share) ..............                                                      (572,112)      (572,112)
Stock options exercised ......................                        11,944       7,226,729                      7,238,673
Tax benefit from the exercise of non-qualified
   stock options .........................                                         2,600,000                      2,600,000
                                                                ------------    ------------    ------------   ------------
Balance June 30, 1999 ........................                  $    147,849    $ 36,124,511    $ 13,178,141   $ 49,450,501
                                                                ============    ============    ============   ============
</TABLE>

                                                              Page 5 or 39 pages
<PAGE>   6
                           ROCK FINANCIAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 1998 AND 1999
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                               For the Six-Month
                                                                                             Periods Ended June 30,
                                                                                  -----------------------------------------
                                                                                        1998                      1999
                                                                                  ---------------           ---------------
<S>                                                                              <C>                       <C>
Cash flows from operating activities:
     Net income ................................................................  $     9,036,631           $     2,148,792
                                                                                  ---------------           ---------------
     Adjustments to reconcile net income to net cash
         provided by operating activities:
         Minority interest in loss of subsidiary ...............................                                    (84,898)
         Depreciation and amortization .........................................        1,052,050                 1,260,060
         Provision for credit losses ...........................................          249,710                   683,559
         Deferred income taxes .................................................       (1,564,850)                1,045,000
         Mortgage loans held for sale - originations ...........................     (969,163,180)           (1,139,790,248)
         Mortgage loans held for sale - sales ..................................      998,838,753             1,213,504,624
         Change in assets and liabilities:
              Prepaid federal income tax .......................................                                 (3,792,272)
              Other assets .....................................................           62,617                  (833,669)
              Drafts payable ...................................................       12,334,129                 5,147,786
              Accounts payable .................................................        1,570,138                (1,545,424)
              Accrued expenses and other liabilities ...........................        2,949,044                (1,818,657)
                                                                                  ---------------           ---------------
                  Total adjustments ............................................       46,328,411                73,775,861
                                                                                  ---------------           ---------------
                  Net cash provided by operating activities ....................       55,365,042                75,924,653
                                                                                  ---------------           ---------------
Cash flows from investing activities:
     Net increase in real estate owned and loans
         held for investment ...................................................         (779,013)                 (342,223)
     Purchase of property and equipment ........................................       (3,519,186)               (1,186,148)
     Repayments of shareholders' advances ......................................        1,626,519                   994,372
                                                                                  ---------------           ---------------
              Net cash used in investing activities ............................       (2,671,680)                 (533,999)
                                                                                  ---------------           ---------------
Cash flows from financing activities:
     Net payments under warehouse line of credit ...............................      (52,172,830)              (68,112,014)
     Net payments under reverse repurchase agreement ...........................      (15,775,649)              (11,521,065)
     Net payments under notes payable ..........................................       (1,944,445)
     Investment in subsidiary by minority interest .............................                                    300,000
     Net proceeds from intial public offering ..................................       31,045,350
     Proceeds from exercised options ...........................................        1,544,400                 9,838,673
     Cash dividends ............................................................         (276,589)                 (572,112)
     S Corporation distribution ................................................      (24,980,500)
                                                                                  ---------------           ---------------
     Net cash used in financing activities .....................................      (62,560,263)              (70,066,518)
                                                                                  ---------------           ---------------
Net (decrease) increase in cash and cash equivalents ...........................       (9,866,901)                5,324,136
Cash and cash equivalents, beginning of period .................................       11,946,992                30,081,524
                                                                                  ---------------           ---------------
Cash and cash equivalents, end of period .......................................  $     2,080,091           $    35,405,660
                                                                                  ===============           ===============

Supplemental disclosure of cash flow information:
     Cash paid during the period for interest ..................................  $     3,686,167           $     2,509,948
                                                                                  ===============           ===============
     Cash paid during the period for federal income tax ........................  $                         $     1,156,000
                                                                                  ===============           ===============
     Transfers of loans from held for sale to held
         for investment ........................................................  $       551,804           $     1,420,641
                                                                                  ===============           ===============
     Transfers of loans from held for investment to
         real estate owned .....................................................  $        45,880           $       447,124
                                                                                  ===============           ===============
</TABLE>



                                                              Page 6 of 39 pages
<PAGE>   7
                           ROCK FINANCIAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   FINANCIAL STATEMENT PRESENTATION:

         The accompanying unaudited interim financial statements of Rock
Financial Corporation (the "Company") and its subsidiary have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, such financial statements do not include all of the information and
footnotes normally included in the Company's annual financial statements
prepared in accordance with generally accepted accounting principles, although
the Company believes that the disclosures are adequate to make the information
presented not misleading.

         The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to present a fair
statement of the results of operations for the interim periods presented. All
such adjustments are of a normal recurring nature, except those not material to
the Company's financial condition or results of operations. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Operating results for the three- and six-month periods ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. The unaudited interim financial statements should be
read in conjunction with the audited financial statements and footnotes to such
financial statements for the year ended December 31, 1998 included in the
Company's Annual Report on Form 10-K (file no. 000-23887) for the year ended
December 31, 1998.

2.   MORTGAGE LOANS HELD FOR SALE AND HELD FOR INVESTMENT:

         The following summarizes mortgage loans held for sale by type at
December 31, 1998 and June 30, 1999:

<TABLE>
<CAPTION>
                                                                               December 31,           June 30,
                                                                                   1998                 1999
                                                                             ---------------      ----------------
<S>                                                                         <C>                   <C>
Conventional loans held for sale..............................              $    123,240,133      $     65,624,051
Sub-prime loans held for sale.................................                    30,542,410             7,532,466
Government loans held for sale................................                       941,966             8,676,446
High LTV loans held for sale..................................                       671,748                    --
                                                                            ----------------      ----------------
                                                                                 155,396,257            81,832,963
Net deferred loan origination costs...........................                       234,855                83,773
                                                                            ---------------       ----------------
    Mortgage loans held for sale..............................              $    155,631,112      $     81,916,736
                                                                            ================      ================
</TABLE>

         Included in mortgage loans held for investment at December 31, 1998 and
June 30, 1999 is an allowance for credit losses of $634,851 and $1,272,085,
respectively. The activity for the six months ended June 30, 1999 includes a
provision of $683,559 offset by charge-offs of $46,325. The activity for the
year ended December 31, 1998 includes a provision of $567,738 offset by
charge-offs of $202,888.

         As of December 31, 1998 and June 30, 1999, there were no loans held for
     sale that were greater than 90 days past due. As of December 31, 1998 and
     June 30, 1999, there were

                                                              Page 7 of 39 pages
<PAGE>   8

     approximately $753,000 and $1,753,000, respectively, of loans held for
     investment that were greater than 90 days past due, the vast majority of
     which is sub-prime loans.

3.   RELATED PARTY TRANSACTIONS:

         The Company's short-term advances to certain shareholders were repaid
     in full on March 31, 1999.

4.   EARNINGS PER SHARE:

         Basic earnings per share are computed based on the weighted average
     number of common shares outstanding during the period. Diluted earnings per
     share are computed based on the weighted average number of common shares
     and common share equivalents during the period.

5.   UNAUDITED PRO FORMA FINANCIAL INFORMATION:

         The pro forma financial information has been presented to show what the
     significant effects on the historical results of operations might have been
     had the Company not been treated as an S corporation for income tax
     purposes as of the beginning of the earliest period presented. The
     presentation of pro forma net income represents the historical results of
     operations adjusted to recognize federal and state income taxes as if the
     Company had been taxed as a C corporation rather than an S corporation for
     all of the periods presented, using a pro forma combined federal and state
     income tax rate of approximately 34.0%.

         Pro forma basic earnings per share for the period ended June 30, 1998
     have been computed by dividing pro forma net income by the 13,829,500
     average shares assumed to be outstanding, including the 3,499,500 shares
     sold by the Company in its initial public offering and the 330,000 shares
     sold by certain existing shareholders in its initial public offering (after
     exercising options to purchase those shares from the Company). Pro forma
     diluted earnings per share for the period ended June 30, 1998 have been
     computed by dividing pro forma net income by the 14,945,181 average shares
     assumed to be outstanding, including the 3,499,500 shares sold by the
     Company in its initial public offering and the 330,000 shares sold by
     certain existing shareholders in its initial public offering (after
     exercising options to purchase those shares from the Company) as well as
     the number of common stock equivalent shares assumed to be outstanding upon
     exercise of the Company's stock options existing as of June 30, 1998, using
     the treasury stock method and the $10.25 per share closing market price of
     the Company's common shares as of June 30, 1998, as reported by The Nasdaq
     Stock Market.

                                                              Page 8 of 39 pages
<PAGE>   9

6.   SEGMENT REPORTING:

         The Company adopted SFAS No. 131 in 1998 and was comprised of three
     major operating divisions based on the major products it offered in 1998
     and in the first quarter of 1999. As of April 1, 1999, the Company changed
     the way it manages its business from divisions based on products to
     divisions based on the distribution channels for its loan products: the
     Web/Call Center division, the Branch network and the Strategic Alliance
     Program. The following table shows the contribution to revenues and
     expenses and the loan closings of each of the Company's distribution
     channels for the three- and six-month periods ended June 30, 1998 and June
     30, 1999 (the comparative prior year information has been restated to
     conform to the current segmentation of the Company's business). Corporate
     overhead is included in other revenues and expenses. Other than loans, the
     Company's assets are not specifically allocated to its three distribution
     channels and therefore, not used by management for operating decisions with
     respect to the distribution channels. As a result, total assets by
     distribution channel are not presented.

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED JUNE 30, 1998
                                                            (IN THOUSANDS)
                             -------------------------------------------------------------------------------
                               WEB/CALL                       STRATEGIC
                                CENTER           BRANCH        ALLIANCE
                               DIVISION          NETWORK       PROGRAM           OTHER              TOTAL
                             --------------  -----------     -----------       ----------      -------------
<S>                         <C>             <C>              <C>               <C>             <C>
Revenues                     $  3,126.3      $  19,096.4      $       --        $  (127.9)      $  22,094.8
Expenses                        2,145.8         12,110.5              --          2,731.6          16,987.9
                             ----------      -----------      ----------        ---------       -----------
Net contribution
before tax and               $    980.5      $   6,985.9      $       --        $(2,859.5)      $   5,106.9
minority interest            ==========      ===========      ==========        =========       ===========

Loan closings                $ 44,948.8      $ 467,103.4      $       --        $     --        $ 512,052.2
                             ==========      ===========      ==========        =========      ============
</TABLE>

<TABLE>
<CAPTION>
                             ------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED JUNE 30, 1999
                                                                (IN THOUSANDS)
                             ------------------------------------------------------------------------------------
                               WEB/CALL                           STRATEGIC
                                CENTER            BRANCH           ALLIANCE
                               DIVISION           NETWORK          PROGRAM             OTHER            TOTAL
                             -----------        -----------       ----------        -----------       -----------
<S>                         <C>                <C>               <C>               <C>              <C>
Revenues                     $   3,332.4        $  12,402.4       $  1,057.3        $   (125.2)       $  16,666.9
Expenses                         3,430.4            8,402.5          1,340.3           4,377.5           17,550.7
                             -----------        -----------       ----------        ----------        -----------
Net contribution
before tax and
minority interest            $     (98.0)       $   3,999.9       $   (283.0)       $ (4,502.7)       $    (883.8)
                             ===========        ===========       ==========        ==========        ===========
Loan closings                $ 112,195.2        $ 355,516.2       $ 56,897.6        $       --        $ 524,610.0
                             ===========        ===========       ==========        ==========        ===========
</TABLE>


                                                              Page 9 of 39 pages
<PAGE>   10

<TABLE>
<CAPTION>
                                                      SIX MONTHS ENDED JUNE 30, 1998
                                                             (IN THOUSANDS)
                             -------------------------------------------------------------------------------------
                               WEB/CALL                             STRATEGIC
                                CENTER             BRANCH            ALLIANCE
                               DIVISION           NETWORK           PROGRAM             OTHER           TOTAL
                             -----------       ------------       -------------      ----------      ------------
<S>                         <C>               <C>                <C>                <C>             <C>
Revenues                     $   6,035.8       $   35,211.9       $          --      $   (232.0)     $   41,015.7
Expenses                         4,165.7           22,143.0                  --         5,497.8          31,806.5
                             -----------       ------------       -------------      ----------      ------------
Net contribution
before tax and
minority interest            $   1,870.1       $   13,068.9       $          --      $ (5,729.8)     $    9,209.2
                             ===========       ============       =============      ==========      ============

Loan closings                $  68,152.2       $  925,059.5       $          --      $       --      $  993,211.7
                             ===========       ============       =============      ==========      ============
</TABLE>

<TABLE>
<CAPTION>
                             ------------------------------------------------------------------------------------
                                                      SIX MONTHS ENDED JUNE 30, 1999
                                                             (IN THOUSANDS)
                             ------------------------------------------------------------------------------------
                               WEB/CALL                              STRATEGIC
                                CENTER             BRANCH             ALLIANCE
                               DIVISION            NETWORK           PROGRAM          OTHER            TOTAL
                             --------------     ------------       -----------      ----------     --------------
<S>                         <C>                <C>                <C>              <C>            <C>
Revenues                     $    6,915.5       $   29,442.7       $   1,057.3      $   (680.8)    $     36,734.7
Expenses                          5,842.0           18,203.1           1,340.3         8,076.4           33,461.8
                             ------------       ------------       -----------      ----------     --------------
Net contribution
before tax and
minority interest            $    1,073.5       $   11,239.6       $    (283.0)     $ (8,757.2)    $      3,272.9
                             ============       ============       ===========      ==========     ==============

Loan closings                $  234,572.6       $  807,311.8       $  56,897.6      $       --     $  1,098,782.0
                             ============       ============       ===========      ==========     ==============
</TABLE>

7.   BRANCH CLOSINGS

         Management's evaluation of the performance of certain retail branches
     during the fourth quarter of 1998 concluded that their continuing viability
     was questionable. The branches' performance was creating both operating
     losses and a "cash drain" on the resources of the Company. As of December
     31, 1998, management committed to a plan to close nine Fresh Start stores.
     In 1998, the combined loss for the stores closed was $2.5 million,
     excluding the loss recognized for the closing of such stores. A $2.0
     million accrual was established for this loss at December 31, 1998. As of
     June 30, 1999, the Company had incurred approximately $1.4 million relating
     to the store closings, which consisted of fixed asset write-offs, ongoing
     lease commitments, and severance pay for terminated employees. The
     remaining balance in the reserve of approximately $0.6 million is expected
     to be utilized over the remaining life of the lease obligations and/or
     lease termination payments.

                                                             Page 10 of 39 pages
<PAGE>   11

8.   COMMITMENTS AND CONTINGENCIES

         The Company signed a lease in April 1999 for a 110,000 square foot
     facility that will afford us the room to potentially create a new 400-seat
     Web/Call Center, including room for approximately 200 loan officers, and
     its National Support Center. The new facility will more than triple the
     size of the Company's current Web/Call Center, which is nearing capacity.
     The move is expected to take place in the fourth quarter of 1999. The
     Company estimates that the move will cost it approximately $5.5 million
     between equipment, new technology, leasehold improvements and moving costs
     and accelerated depreciation in the third and fourth quarters of 1999, $3.5
     million of which the Company expects to capitalize, and that the new larger
     facility will increase operating expenses by approximately $125,000 to
     $150,000 a month. As of June 30, 1999, the Company has incurred
     approximately $260,000 of expenses related to the relocation.

9.   SUBSEQUENT  EVENTS

         In the beginning of the third quarter of 1999, management approved and
     announced a strategic move to close and consolidate twelve of its remaining
     fifteen branches. As of June 30, 1999, no accrual has been established for
     this plan; however, the Company expects to take a one-time charge of
     $3.5-4.5 million in the third quarter of 1999 related to these branch
     closings. The Company also launched a national advertising campaign in the
     third quarter of 1999 to increase recognition its "Rock Financial" and
     "RockLoans.com" brand names. The campaign is expected to cost up to $20
     million dollars over twelve months.

         In July 1999, the Board of Directors of the Company determined to not
     pay a dividend in the third quarter of 1999.



                                                             Page 11 of 39 pages
<PAGE>   12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

         With the exception of historical information, some of the matters
discussed in this Management's Discussion and Analysis of Financial Condition
and Results of Operations are forward-looking statements that involve risks and
uncertainties and actual results could differ materially from those discussed.
The words and phrases "may," "will," "should," "believe," "expect,"
"anticipate," "estimate," "continue," "predict," and similar expressions
identify forward-looking statements. These forward-looking statements reflect
our current views with respect to future events in financial performance, but
are subject to many risks, uncertainties and factors relating to our operations
and business environment which may cause our actual results to differ materially
from historical results or any future results expressed or implied by such
forward-looking statements. Such risks and uncertainties include the factors
described under the caption "Risk Factors" and elsewhere in the Company's
Registration Statement on Form S-1 (file no. 333-46885) filed April 30, 1998 and
elsewhere in this Report.

GENERAL

         We are a technology and service driven retail mortgage banking company
that markets conventional, government-insured, and sub-prime mortgage loans and
home equity lines of credit directly to consumers through the Internet
(www.RockLoans.com), our call center, three retail branches and our strategic
alliance program. We believe we are developing a growing brand identity, built
upon our technology, service, people and marketing. We believe we are unlike
most mortgage companies and loan middlemen that have Web sites on the Internet.
We process, underwrite and close the loan ourselves without referring the
customer to another company to perform these services and without charging
additional brokerage fees to our customers. We seek to provide "world class"
service to our customers, thereby encouraging them to return for future loans
and refer others to us for loans. As of August 11, 1999, we had 561 employees,
including 218 loan officers.

         As of April 1, 1999, we changed the way we manage our business, from
managing divisions based on product to divisions based on the method of
distribution of our loan products: the Web/Call Center division, the Branch
network and the Strategic Alliance Program. Our Web/Call Center division markets
loans on-line through our Internet Web site, RockLoans.com, which began
originating loans in January 1999. Our Web/Call Center division also markets
loans through our call center located in our National Support Center in Bingham
Farms, Michigan. Our Branch network markets loans through our network of three
retail loan origination branches. Our Strategic Alliance Program currently
consists of one joint venture, a 70%-owned limited liability company that
originates residential mortgage products to Michigan National Bank's customers
through Michigan National Bank's 192 financial centers, a call center and over
the Internet. Michigan National Bank has approximately 450,000 customers and
owns the other 30% of the joint venture. The joint venture began business in
April 1999.

                                                             Page 12 of 39 pages

<PAGE>   13

         We expect 1999 to be a transition year for us, as we move from a brick
and mortar branch operation to one more based on Internet, Call Center and
Strategic Alliance mortgage lending  channels. We expect that this transition
will adversely affect our short-term earnings. We believe that technology is
changing the way mortgages are originated. Consequently, we announced in July
that we will be closing and consolidating twelve of our fifteen remaining
branches as we began to concentrate more of our resources and marketing efforts
on originating mortgages through our two new distribution channels, the Internet
and our Strategic Alliance Program. We expect to take a one-time charge of
$3.5-4.5 million in the third quarter of 1999 related to the branch closings.

         In the second quarter of 1999, margins on all of our products, and
volumes of our Conventional Loans as well as our Sub-Prime Loans continued to
decline from fourth quarter 1998 levels. Margins on our Conventional Loans as
well as the volumes of our Conventional Loan and Sub-Prime Loan originations
have also continued to decline so far in the third quarter of 1999 from the
second quarter 1999 levels. The declines are primarily due to higher interest
rates, lower refinancing loan volumes and our closing of 25 branches and one
marketing center in 1999. We expect these trends to continue in the third and
fourth quarters of 1999 and our third and fourth quarter 1999 earnings to be
substantially below our first and second quarter 1999 earnings.

         We also plan to make several other moves that are intended to further
our long-term business and our transition from a brick and mortar branch
operation to one more based on Internet, Call Center and Strategic Alliance
mortgage lending channels. We expect that this transition will adversely affect
our short-term earnings. We have signed a lease for an 110,000 square foot
facility that will afford us the room to potentially create a new 400-seat
Web/Call Center, including room for approximately 200 loan officers, and our
National Support Center. The move is expected to take place in the fourth
quarter of 1999. We estimate that the move will cost us approximately $5.5
million between equipment, new technology, leasehold improvements and moving
costs and accelerated depreciation in the third and fourth quarters of 1999,
$3.5 million of which we expect to capitalize, and that the new larger facility
will increase our operating expenses by approximately $125,000 to $150,000 a
month.

         We also launched a multi-million dollar national advertising campaign
in the third quarter of 1999 to increase recognition for our "Rock Financial"
and "RockLoans.com" brand names. We plan to spend up to $20 million dollars over
twelve months for national promotion of our Web site, RockLoans.com. We recently
began airing advertisements on national television stations and expect to also
sponsor radio advertising, national print publications and other traditional
media. We expect this advertising campaign to increase incrementally as our
processing and closing infrastructure capable of handling the expected loan
volume increase from this campaign is developed, including the new Web/Call
Center. In addition, we have recently signed agreements with iClick and
broadcast.com in an effort to aggressively align us with other leading Internet
companies to harness strategic marketing opportunities on the Web. Each of the
events described above, however, is expected to have an adverse effect on our
earnings, in the short-term.



                                                             Page 13 of 39 pages

<PAGE>   14
TERMINATION OF S CORPORATION STATUS AND INCOME TAXES

         Simultaneously with the closing of our initial public offering on May
6, 1998 (the "Offering"), we ceased to be taxed as an S corporation under the
Internal Revenue Code. In connection with the termination of our S corporation
status, we paid an estimate of our income taxed or taxable to our shareholders
while we were an S Corporation, but not yet distributed to them ("Shareholder
Distribution Amount") out of the net proceeds of the Offering to our
shareholders existing immediately before the closing of the Offering (the
"Existing Shareholders"). The estimated Shareholder Distribution Amount,
including the approximately $5.4 million tax distribution to the Existing
Shareholders on April 10, 1998, was approximately $25.0 million. Based upon the
final results of 1998, the Existing Shareholders were required to pay us
approximately $800,000, representing the excess of amounts disbursed in May 1998
over the year-end estimate of the taxable income allocable to the Existing
Shareholders. The amount due to us was paid in full as of March 31, 1999.

         As an S corporation, our income, whether or not distributed, was taxed
at the shareholder level for federal and state tax purposes. When we terminated
our S corporation status, we became subject to federal and state income taxation
and we recorded a $1.8 million deferred tax asset on our balance sheet along
with a current income tax liability of $0.9 million as of May 6, 1998. The
amount of the deferred tax asset is based on timing differences between tax and
book accounting relating principally to marking loans to market for tax
purposes. The pro forma provision for income taxes in the statements of income
are intended to show results as if we had been subject to federal and state
taxation at the tax rates effective for the periods presented.


                                                             Page 14 of 39 pages
<PAGE>   15

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1999
         VERSUS THREE MONTHS ENDED JUNE 30, 1998

         The following table sets forth our revenues, expenses and pre-tax
income for the three months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>

                                                                               Three Months Ended June 30,
                                                                               ---------------------------
                                                                                 1998              1999
                                                                               ---------        ----------
                                                                                    (In thousands)
<S>                                                                           <C>              <C>
       Total revenue .....................................................     $ 22,095         $ 16,667
       Total expenses ....................................................      (16,988)         (17,551)
                                                                               --------         --------
       Income (loss) before taxes and minority
       interest ..........................................................     $  5,107         $   (884)
                                                                               ========         ========
</TABLE>


         Our total revenues decreased from $22.1 million in the second quarter
of 1998 to $16.7 million in the second quarter of 1999, a decrease of $5.4
million, or 24.6%. The decrease in revenues is primarily due to the following:

     -   a decrease of $52.5 million, or 51.1%, in the volume of Sub-Prime Loans
         we sold in the second quarter of 1999 compared to the second quarter of
         1998;
     -   a decrease of $20.1 million, or 98.5%, in the volume of High LTV Loans
         we sold in the second quarter of 1999 compared to the second quarter of
         1998; and
     -   a 28.3% decrease in margins earned on loan fees and gains on sale of
         Sub-Prime Loans in the second quarter of 1999 compared to the second
         quarter of 1998;

partially offset by the following:

     -   an increase of $41.1 million, or 364.2%, in the volume of
         government-insured loans we sold in the second quarter of 1999 compared
         to the second quarter of 1998;
     -   an increase of $20.9 million, or 5.2%, in the volume of Conventional
         Loans we sold in the second quarter of 1999 compared to the second
         quarter of 1998; and
     -   a 7.1% increase in margins earned on loan fees and gains on sale of
         Conventional Loans in the second quarter of 1999 compared to the second
         quarter of 1998.

         In the second quarter of 1999, margins on all of our products, and
volumes of our Conventional Loan and Sub-Prime Loan originations, continued to
decline from fourth quarter 1998 levels. Margins on our Conventional Loans as
well as the volumes of our Conventional Loan and Sub-Prime Loan originations
have also continued to decline so far in the third quarter of 1999 from the
second quarter 1999 levels. The declines are primarily due to higher interest
rates, lower refinancing loan volumes and our closing of 25 branches and one
marketing center in 1999. We expect these trends to continue in the third and
fourth quarters as we continue our transition from a brick and mortar based loan
origination system to an Internet and call center-based



                                                             Page 15 of 39 pages
<PAGE>   16

platform. We also expect our third and fourth quarter earnings to be
substantially below our first and second quarter 1999 earnings.

During the second quarter of 1999, we disbursed $534.2 million of loans, an
increase of $24.8 million, or 4.9%, from the $509.4 million of loans disbursed
in the second quarter of 1998. The $24.8 million increase included a $52.1
million increase in Conventional Loans, a $44.9 million increase in
government-insured loans, and a $1.2 million increase in Home Equity Line of
Credit Loans, partially offset by a $57.0 million decrease in Sub-Prime Loans
and a $16.4 million decrease in High LTV Loans. Our loans held for sale
increased by $2.9 million in the second quarter of 1999, compared to a decrease
of $31.5 million in the second quarter of 1998. The increase was due to our
disbursing $534.2 million in loans while selling $531.3 million in loans in the
second quarter of 1999. The increase in loans held for sale in the second
quarter of 1999 included increases of $6.2 million in Conventional Loans, $2.7
million in government-insured loans and $0.3 million in Home Equity Line of
Credit Loans partially offset by a $6.3 million decrease in Sub-Prime Loans. The
decrease in loans held for sale in the second quarter of 1998 included decreases
of $24.9 million in Conventional Loans, $1.8 million in Sub-Prime Loans, $3.7
million in High LTV Loans and $1.1 million in Home Equity Line of Credit Loans.

         Total expenses increased from $17.0 million in the second quarter of
1998 to $17.6 million in the second quarter of 1999, an increase of $0.6
million, or 3.3%, primarily due to compensation for new management, marketing,
technology and other support employees, partially offset by lower commissions as
a result of an increase in the portion of Conventional Loans originated, which
have lower commission rates than our other products, and reduced marketing
expenses, partly as a result of closing branches in the first two quarters of
1999.

         The following table sets forth information regarding the components of
our revenues for the three months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>
                                                                                           Three Months
                                                                                          Ended June 30,
                                                                                   ----------------------------
                                                                                     1998               1999
                                                                                   --------           ---------
                                                                                          (In thousands)
<S>                                                                               <C>                <C>
Interest income ................................................................   $  3,128           $  1,886
Interest expense ...............................................................     (1,882)              (613)
                                                                                   --------           --------
     Net interest margin .......................................................      1,246              1,273
Provision for credit losses ....................................................       (135)              (113)
                                                                                   --------           --------
     Net interest margin after provision for credit losses .....................      1,111              1,160
Loan fees and gains on sale of mortgages .......................................     20,977             15,519
Other income ...................................................................          7                (12)
                                                                                   --------           --------
     Total revenue .............................................................   $ 22,095           $ 16,667
                                                                                   ========           ========
</TABLE>

         Net interest margin before provision for credit losses increased from
$1.2 million in the second quarter of 1998 to $1.3 million in the second quarter
of 1999, an increase of $0.1 million, or 2.2%. The increase was primarily due to
the following:

         -   a decrease in the weighted average interest rates paid on our
             borrowing facilities, from 6.95% in the second quarter of 1998 to
             6.05% in the second quarter of 1999; and

                                                             Page 16 of 39 pages
<PAGE>   17

         -   our increased use of cash generated from operations and our initial
             public offering to fund our loans;

         partially offset by:

         -   an increase in the portion of loans sold on a "flow" basis,
             resulting in a decrease in the length of time loans were held
             before sale; and

         -   a decrease in mortgages held for sale in the second quarter of
             1999.

         In the remainder of 1999, we intend to continue holding our loans for a
shorter period of time before selling them, which we expect will significantly
decrease our net interest margin from that experienced in the comparative
quarters of 1998.

         Buyers of our loans may require us to repurchase or substitute loans in
the event of a breach of representations and warranties, including any fraud or
any misrepresentation made during the loan origination process. In addition,
during the period we hold our loans we face the risk of delinquencies and
resulting foreclosure losses. As a result of these risks we recorded a provision
for credit losses of approximately $135,000 in the second quarter of 1998 and
recorded a provision for credit losses of approximately $113,000 in the second
quarter of 1999, partly for future repurchase or substitution requirements
relating to loans sold before June 30, 1998 and 1999, respectively, and credit
risk for loans held for sale and investment. The decrease was primarily due to
the decrease in the volume of Sub-Prime Loans held for sale coupled with the low
amount of charge-offs and losses incurred on loans held for investment to date.
During the second quarter of 1998 no loans were reclassified as real estate
owned. In the second quarter of 1999, three loans were reclassified as real
estate owned, resulting in charges of approximately $36,000 against the reserve.

         Loan fees and gains on sale of mortgages decreased from $21.0 million
in the second quarter of 1998 to $15.5 million in the second quarter of 1999, a
decrease of $5.5 million, or 26.0%. The decrease in revenue is primarily due to
the decrease in sale of loans described above, as well as changes in the margins
earned on loan fees and gains on sale of loans described above. The decrease in
the volume of High LTV Loans we sold is a result of our decision to stop
originating High LTV Loans in the third quarter of 1998. The decrease in the
volume of Sub-Prime Loans we sold is primarily due to a 57.3% decrease in
Sub-Prime Loan closings as a result of our decision to shift some of our
resources to handle the higher demand for Conventional Loans and
government-insured loans and our branch closings in the first and second
quarters of 1999, partially offset by our sale of $6.3 million more Sub-Prime
Loans in the second quarter of 1999 than we disbursed, compared to $1.8 million
more in the second quarter of 1998. The increase in the volume of Conventional
Loans we sold is primarily due to a 10.2% increase in Conventional Loan closings
as a result of a higher volume of home purchase loans in the second quarter of
1999 compared to the second quarter of 1998, partially offset by our sale of
$6.4 million fewer Conventional Loans in the second quarter of 1999 than we
disbursed, compared to $26.0 million more in the second quarter of 1998. The
increase in the volume of government-insured loans we sold is primarily due to a
475.9% increase in government-insured loan closings as a result of a higher
volume of home purchase loans in the second quarter of 1999 compared to the
second quarter of 1998, partially offset by our sale of $2.7 million fewer
government-insured loans in the

                                                             Page 17 of 39 pages

<PAGE>   18

second quarter of 1999 than we disbursed, compared to $0.1 million fewer in
the second quarter of 1998.

         The increase in margins earned on loan fees and gains on sale of
Conventional Loans, when comparing the second quarter of 1999 to the second
quarter of 1998, was primarily the result of more favorable execution of our
loan sales, partially offset by increased interest rates, which increased the
need for rate competitiveness. In the third quarter of 1999, margins earned on
loan fees and gains on sale of Conventional Loans have declined from those of
the second quarter so far because of an increase in interest rates that has
increased the need for rate competitiveness. We also expect that Conventional
Loan closings will further decline in the third and fourth quarters of 1999
compared to the second quarter of 1999 due, in part, to increases in mortgage
interest rates in 1999, which should reduce consumer demand for refinancing
existing mortgages, along with the closing of 25 branches (includes the 13
closed in the first six months of 1999 and the 12 additional closed in the third
quarter) and one marketing center and the transition to a Web/Call Center
environment. The decrease in margins earned on loan fees and gains on sale of
Sub-Prime Loans was due to the turmoil in the industry, which created a surplus
of Sub-Prime Loans available for sale thereby driving down the prices of these
loans. We expect both loan closings and revenue to decline from Sub-Prime Loans
in the third and fourth  quarters of 1999, principally due to the branch
closings in the first and second quarters of 1999 and the additional closures to
occur in the third quarter of 1999.

         The decrease in loan fees and gains on sale of mortgages was partially
offset by a decrease in our recapture reserve in the second quarter of 1999.
Some Sub-Prime Loan sales require us to return a portion of the premium we
received on the sale of the loan if the loan is prepaid by the customer within
the first year after sale. We record a provision for this risk separate from the
provision for credit losses based on our evaluation of the terms of our sale
contracts and our assumptions concerning prepayments. We increased our reserve,
and decreased our loan fees and gains on sale of mortgages, by approximately
$414,000, in the second quarter of 1998. Virtually all of the loans we
originated in the second quarter of 1999 contained a prepayment penalty in
excess of the reserve requirement. Therefore, based on our analysis, the reserve
for this premium recapture was adequate at June 30, 1999 and no further
provision was required.

                                                             Page 18 of 39 pages
<PAGE>   19

         The following table sets forth information regarding the components of
our expenses for the three months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>
                                                                                           Three Months
                                                                                          Ended June 30,
                                                                                    --------------------------
                                                                                      1998             1999
                                                                                    -------           --------
                                                                                          (In thousands)
<S>                                                                                <C>                <C>
Salaries, commissions and employee benefits ....................................    $ 9,650            $11,113
General and administrative expenses ............................................      3,268              3,594
Marketing expenses .............................................................      3,561              2,221
Depreciation and amortization ..................................................        509                623
                                                                                    -------            -------
     Total expenses ............................................................    $16,988            $17,551
                                                                                    =======            =======
</TABLE>

         Salaries, commissions and employee benefits increased from $9.7 million
in the second quarter of 1998 to $11.1 million in the second quarter of 1999, an
increase of $1.4 million, or 15.2%. The increase was primarily attributable to
compensation for new management team members and additional hiring of staff to
the marketing, technology and other support areas to facilitate the transition
to a Web/Call Center based platform, partially offset by reduced commissions
which were due to the change to the mix of products originated, more
conventional loans were closed, which have a lower commission structure than the
Sub-Prime and High LTV Loans and reduced marketing expenses as a result of
closing branches in the first two quarters of 1999. These expenses are expected
to continue to fluctuate in 1999 in connection with our expansion of existing
operations, which includes our continued development of our Internet presence
and strategic alliance.

         General and administrative expenses consist primarily of occupancy
costs, professional services, office expenses, automobile and delivery expenses
and other expenses, many of which vary with the volume of loan closings. General
and administrative expenses increased from $3.3 million in the second quarter of
1998 to $3.6 million in the second quarter of 1999, an increase of $0.3 million,
or 10.0%. The increase was primarily attributable to an increase in professional
services and expenses related to technology, support and other personnel hired
in connection with our new Web site. Certain of these expenses are expected to
vary according to the volume of  loan closings in 1999, except for occupancy
expenses, which are expected to increase in connection with our move to a new
Web/Call Center and National Support Center, which management expects to occur
in the fourth quarter of 1999, and the reduction of those ongoing expenses
attributable to the branch closings in the third quarter of 1999.

         Marketing expenses decreased from $3.6 million in the second quarter of
1998 to $2.2 million in the second quarter of 1999, a decrease of $1.4 million,
or 37.6%. The decrease was primarily attributable to our closing 13 branches and
one marketing center in the first two quarters of 1999 and our discontinued
origination of High LTV Loans in the third quarter of 1998. We expect these
expenses to increase for the remainder of 1999 in connection with our announced
national advertising program and the expansion of existing operations which
includes the continuation of development of our Internet presence and strategic
alliances.

         Depreciation and amortization expenses increased from $0.5 million in
the second quarter of 1998 to $0.6 million in the second quarter of 1999, an
increase of $0.1 million, or 22.3%. The

                                                             Page 19 of 39 pages
<PAGE>   20


increase was primarily attributable to our purchases of additional equipment
and leasehold improvements during 1998 and 1999 for our new Web center and
existing branches. The expenses are expected to continue to increase in 1999
as a result of the expansion of our Web center and the relocation of our
Web/Call Center and National Support Center, which will require accelerated
depreciation of the leasehold improvements at our current location in the third
and fourth quarters of 1999.

         Effective May 6, 1998, the Company's tax status changed from that of an
S corporation to that of a C corporation. As a C corporation we became subject
to federal and state income taxation in the second quarter of 1998. As an S
corporation, our taxable income was included in the individual returns of the
shareholders. As a result, our income taxes due to quarterly earnings for the
second quarter of 1998 represents income taxes provided based on our estimated
allocation of income before income taxes between the S corporation and the C
corporation as required under IRS regulations.

         In addition, in connection with the change in our tax status, we
recognized a net income tax benefit due to conversion of the S corporation of
approximately $0.9 million during the second quarter of 1998. Upon conversion to
a C corporation, we recorded a net deferred tax asset of approximately $1.8
million, and recognized a corresponding deferred income tax benefit. The
deferred income tax benefit was somewhat offset by our recognition of a current
income tax liability of approximately $0.9 million associated with the
allocation of our taxable income between the S corporation and the C
corporation. For the quarter ended June 30, 1999, we recognized an income tax
benefit of approximately $0.3 million.

SIX MONTHS ENDED JUNE 30, 1999
         VERSUS SIX MONTHS ENDED JUNE 30, 1998

         The following table sets forth our revenues, expenses and pre-tax
income for the six months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>

                                                                      Six Months Ended June 30,
                                                                     --------------------------
                                                                        1998            1999
                                                                     ----------      ----------
                                                                           (In thousands)
<S>                                                                  <C>                    <C>
       Total revenue..........................................       $   41,016      $   36,735
       Total expenses....                                               (31,807)        (33,462)
                                                                     ==========      ==========
       Income before taxes and minority interest...............      $    9,209      $    3,273
                                                                     ==========      ==========
</TABLE>


         Our total revenues decreased from $41.0 million in the first six months
of 1998 to $36.7 million in the first six months of 1999, a decrease of $4.3
million, or 10.4%. The decrease in revenues is primarily due to the following:

     -   an decrease of $70.0 million, or 36.3%, in the volume of Sub-Prime
         Loans we sold in the first six months of 1999 compared to the first six
         months of 1998;

                                                             Page 20 of 39 pages
<PAGE>   21

     -   a decrease of $44.2 million, or 98.2%, in the volume of High LTV Loans
         we sold in the first six months of 1999 compared to the first six
         months of 1998;
     -   a 68.8% decrease in margins earned on loan fees and gains on sale of
         High LTV Loans in the first six months of 1999 compared to the first
         six months of 1998; and
     -   an 27.2% decrease in margins earned on loan fees and gain on sale of
         Sub-Prime Loans in the first six months of 1999 compared to the first
         six months of 1998;

partially offset by the following:

     -   an increase of $272.0 million, or 36.7%, in the volume of Conventional
         Loans we sold in the first six months of 1999 compared to the first six
         months of 1998;
     -   an increase of $56.0 million, or 292.5%, in the volume of
         government-insured loans we sold in the first six months of 1999
         compared to the first six months of 1998;
     -   a 10.4% increase in margins earned on loan fees and gains on sale of
         Conventional Loans in the first six months of 1999 compared to the
         first six months of 1998; and
     -   an 3.6% increase in margins earned on loan fees and gain on sale of
         government-insured loans in the first six months of 1999 compared to
         the first six months of 1998.

         In the first six months of 1999, margins on all of our products
declined from fourth quarter 1998 levels. The volumes of our Conventional Loan
products and Sub-Prime Loan originations have also declined in the first six
months of 1999 from fourth quarter 1998 levels. The declines are primarily due
to higher interest rates, lower refinancing loan volumes, our decision to stop
originating High LTV Loans in the third quarter of 1998, and our closing of 13
branches and one marketing center in the first six months of 1999. We expect
these trends to continue in the second half of 1999 and our earnings in the
second half of 1999 to be substantially below our first and second quarter 1999
earnings.

         During the first six months of 1999, we disbursed $1,139.8 million of
loans, an increase of $170.6 million, or 17.6%, from the $969.2 million of loans
disbursed in the first six months of 1998. The $170.6 million increase included
a $225.2 million increase in Conventional Loans, a $60.7 million increase in
government-insured loans, and a $1.1 million increase in Home Equity Line of
Credit Loans, partially offset by a $76.5 million decrease in Sub-Prime Loans
and a $39.9 million decrease in High LTV Loans. Our loans held for sale
decreased by $73.7 million in the first six months of 1999, compared to a
decrease of $29.7 million in the first six months of 1998. The decrease, which
had a significant positive effect on our profitability, was due to our selling
$1,213.5 million in loans while disbursing $1,139.8 million in loans in the
first six months of 1999. The decrease in loans held for sale in the first six
months of 1999 included decreases of $54.3 million in Conventional Loans, $23.0
million in Sub-Prime Loans and $0.7 million in High LTV Loans, partially offset
by an $4.0 million increase in government-insured loans and a $0.3 million
increase in Home Equity Line of Credit Loans. The decrease in loans held for
sale in the first six months of 1998 included decreases of $16.4 million in
Sub-Prime Loans, $7.5 million in Conventional Loans, $5.1 million in High LTV
Loans and $0.7 million in government-insured loans.

         Total expenses increased from $31.8 million in the first six months of
1998 to $33.5 million in the first six months of 1999, an increase of $1.7
million, or 5.2%. The increase was primarily due to compensation for new
management, marketing, technology and other support employees, partially offset
by reduced commissions as a result of an increase in the portion of

                                                             Page 21 of 39 pages
<PAGE>   22

Conventional Loans originated, which have lower commission rates than our other
products, and reduced marketing expenses, partly as a result of closing
branches in the first two quarters of 1999.

         The following table sets forth information regarding the components of
our revenues for the six months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>

                                                                                             Six Months
                                                                                            Ended June 30,
                                                                                   -------------------------------
                                                                                     1998                 1999
                                                                                   --------              --------
                                                                                           (In thousands)
<S>                                                                               <C>                   <C>
Interest income ................................................................   $  6,228              $  4,913
Interest expense ...............................................................     (3,620)               (2,032)
                                                                                   --------              --------
     Net interest margin .......................................................      2,608                 2,881
Provision for credit losses ....................................................       (250)                 (684)
                                                                                   --------              --------
     Net interest margin after provision for credit losses .....................      2,358                 2,197
Loan fees and gains on sale of mortgages .......................................     38,640                34,535
Other income ...................................................................         18                     3
                                                                                   --------              --------
     Total revenue .............................................................   $ 41,016              $ 36,735
                                                                                   ========              ========
</TABLE>

         Net interest margin before provision for credit losses increased from
$2.6 million in the first six months of 1998 to $2.9 million in the first six
months of 1999, an increase of $0.3 million, or 10.5%. The increase was
primarily due to the following:

         -  a decrease in the weighted average interest rates paid on our
            borrowing facilities, from 6.94% in the first six months of 1998 to
            6.05% in the first six months of 1999; and
         -  our increased use of cash generated from operations and our initial
            public offering to fund our loans;

         partially offset by:

         -  an increase in the portion of loans sold on a "flow" basis,
            resulting in a decrease in the length of time loans were held before
            sale; and
         -  a decrease in mortgages held for sale in first six months of 1999.

         Buyers of our loans may require us to repurchase or substitute loans in
the event of a breach of representations and warranties, including any fraud or
any misrepresentation made during the loan origination process. In addition,
during the period we hold our loans, we face the risk of delinquencies and
resulting foreclosure losses. As a result of these risks we recorded a provision
for credit losses of approximately $250,000 in the first six months of 1998 and
recorded a provision for credit losses of approximately $684,000 in the first
six months of 1999, partly for future repurchase or substitution requirements
relating to loans sold before June 30, 1998 and 1999, respectively, and credit
risk for loans held for sale and investment. The increase was primarily due to
the significant increase in the volume of loans held for investment that were
past due. During the fourth quarter of 1998 and the first quarter of 1999, the
secondary market Sub-Prime Loan buyers changed their underwriting standards,
making it more difficult for us to sell our loans. As a result, we held these
loans for a longer period of time than normal, which resulted

                                                             Page 22 of 39 pages

<PAGE>   23

in more delinquencies. In the second quarter of 1999, we entered into an
agreement with a loan buyer for our Sub-Prime Loans and we are now underwriting
to that buyer's standards. During the first six months of 1998, two loans were
reclassified as real estate owned, resulting in charges of approximately
$159,000 against the reserve. In the first six months of 1999, four loans were
reclassified as real estate owned, resulting in charges of approximately $48,000
against the reserve.

         Loan fees and gains on sale of mortgages decreased from $38.6 million
in the first six months of 1998 to $34.5 million in the first six months of
1999, a decrease of $4.1 million, or 10.6%. This decrease is primarily due to
the change in sales of loans described above, as well as changes in the margins
earned on loan fees and gains on sale of loans described above. The decrease in
the volume of High LTV Loans we sold is a result of our decision to stop
originating High LTV Loans in the third quarter of 1998. The decrease in the
volume of Sub-Prime Loans we sold is primarily due to a 45.8% decrease in
Sub-Prime Loan closings as a result of our decision to shift some of our
resources to handle the higher demand for Conventional Loans and
government-insured loans and our branch closings in the first and second
quarters of 1999, partially offset by our sale of $23.0 million more Sub-Prime
Loans in the first six months of 1999 than we disbursed, compared to $16.5
million more in the first six months of 1998. The increase in the volume of
Conventional Loans we sold is primarily due to a 22.1% increase in Conventional
Loan closings as a result of a higher volume of home purchase loans in the first
six months of 1999 compared to the first six months of 1998, and our sale of
$57.6 million more Conventional Loans in the first six months of 1999 than we
disbursed, compared to $8.2 million more in the first six months of 1998. The
increase in the volume of government-insured loans we sold is primarily due to a
322.2% increase in government-insured loan closings as a result of a higher
volume of home purchase loans in the first six months of 1999 compared to the
first six months of 1998, partially offset by our sale of $7.7 million fewer
government-insured loans in the first six months of 1999 than we disbursed,
compared to $0.1 million fewer in the first six months of 1998. We also expect
that Conventional Loan closings will further decline in the third and fourth
quarters of 1999 compared to the first six months of 1999 due, in part, to
increases in mortgage interest rates in 1999, which should reduce consumer
demand for refinancing existing mortgages, along with the closing of 25 branches
(includes the 13 closed in the first six months of 1999 and the 12 additional
closed in the third quarter) and one marketing center and the transition to a
Web/Call Center environment.

         The decrease in margins earned on loan fees and gains on sale of
Sub-Prime Loans was due to the turmoil in the industry, which created a surplus
of Sub-Prime Loans available for sale thereby driving down the prices of these
loans. We expect both loan closings and revenue to continue to decline from
Sub-Prime Loans in the third and fourth quarters of 1999, principally due to the
branch closings in 1999. The increase in margins earned on loan fees and gains
on sale of Conventional Loans and government-insured loans, when comparing the
first six months of 1999 to the first six months of 1998, was primarily the
result of more favorable arrangements with loan buyers, partially offset by
increased interest rates which increased the need for rate competitiveness. In
the third quarter of 1999, margins earned on loan fees and gains on sale of
Conventional Loans have declined from those of the second quarter so far
because of an increase in interest rates and an increase in Web/Call Center
originations that have increased the need for rate competitiveness.


                                                             Page 23 of 39 pages
<PAGE>   24

         The decrease in loan fees and gains on sale of mortgages was partially
offset by a decrease in our recapture reserve in the first six months of 1999.
Some Sub-Prime Loan sales require us to return a portion of the premium we
received on the sale of the loan if the loan is prepaid by the customer within
the first year after sale. We record a provision for this risk separate from the
provision for credit losses based on our evaluation of the terms of our sale
contracts and our assumptions concerning prepayments. We increased our reserve,
and decreased our loan fees and gains on sale of mortgages, by approximately
$12,800 for this risk in the first six months of 1999, compared to an increase
of approximately $638,000, in the first six months of 1998. The decrease was due
to a provision not being recorded in the second quarter of 1999. Virtually all
of the loans we originated in the second quarter of 1999 contained a prepayment
penalty in excess of the reserve requirement. Therefore, based on our analysis,
the reserve for this premium recapture was adequate at June 30, 1999 and no
further provision was required.


         The following table sets forth information regarding the components of
our expenses for the six months ended June 30, 1998 and 1999:

<TABLE>
<CAPTION>

                                                                                           Six Months
                                                                                          Ended June 30,
                                                                                    -------------------------
                                                                                     1998              1999
                                                                                    -------           -------
                                                                                        (In thousands)
<S>                                                                                <C>               <C>
Salaries, commissions and employee benefits ....................................    $18,196           $20,589
General and administrative expenses ............................................      6,098             7,017
Marketing expenses .............................................................      6,461             4,596
Depreciation and amortization ..................................................      1,052             1,260
                                                                                    -------           -------
     Total expenses ............................................................    $31,807           $33,462
                                                                                    =======           =======
</TABLE>

         Salaries, commissions and employee benefits increased from $18.2
million in the first six months of 1998 to $20.6 million in the first six months
of 1999, an increase of $2.4 million, or 13.1%. The increase was primarily
attributable to salaries for new management, marketing, technology and other
support, partially offset by an increase in the portion of Conventional Loans
originated, which have lower commission rates than our other products and
reduced marketing expenses as a result of closing branches in the first two
quarters of 1999. These expenses are expected to continue to fluctuate in 1999
in connection with our expansion of existing operations, along with our
continued development of our Internet presence and strategic alliance.

         General and administrative expenses consist primarily of occupancy
costs, professional services, office expenses, automobile and delivery expenses
and other expenses, many of which vary with the volume of loan closings. General
and administrative expenses increased from $6.1 million in the first six months
of 1998 to $7.0 million in the first six months of 1999, an increase of $0.9
million, or 15.1%. The increase was primarily attributable to an increase in
occupancy expenses, professional services, and expenses related to technology,
support and other personnel hired in connection with our new Web site. Certain
of these expenses are expected to vary according to the volume of loan closings
in 1999, except for occupancy expenses, which are expected to increase in
connection with our move to a new Web/Call Center and National  Support Center,
which management expects to occur in the fourth quarter of 1999 and the
reduction of those expenses attributable to the branch closings in the third
quarter.

                                                             Page 24 of 39 pages

<PAGE>   25

         Marketing expenses decreased from $6.5 million in the first six months
of 1998 to $4.6 million in the first six months of 1999, a decrease of $1.9
million, or 28.9%. The decrease was primarily attributable to our closing 13
branches and one marketing center in the first six months of 1999 and our
discontinued origination of High LTV Loans in the third quarter of 1998. We
expect these expenses to increase for the remainder of 1999 in connection with
our announced national advertising program and the expansion of existing
operations, along with the continuation of development of our Internet presence
and strategic alliances.

         Depreciation and amortization expenses increased from $1.1 million in
the first six months of 1998 to $1.3 million in the first six months of 1999, an
increase of $0.2 million, or 19.8%. The increase was primarily attributable to
our purchases of additional equipment and leasehold improvements during 1998 and
1999 for our new Web center and existing branches. The expenses are expected to
continue to increase in 1999 as a result of the expansion of existing
operations, expansion of our Web center, and the relocation of our Web/Call
Center and National Support Center.

         Effective May 6, 1998, the Company's tax status changed from that of an
S corporation to that of a C corporation. As a C corporation we became subject
to federal and state income taxation in the first six months of 1998. As an S
corporation, our taxable income was included in the individual returns of the
shareholders. As a result, our income taxes due to quarterly earnings for the
first six months of 1998 represents income taxes provided based on our estimated
allocation of income before income taxes between the S corporation and the C
corporation as required under IRS regulations.

         In addition, in connection with the change in our tax status, we
recognized a net income tax benefit due to conversion of the S corporation of
approximately $0.9 million during the first six months of 1998. Upon conversion
to a C corporation, we recorded a net deferred tax asset of approximately $1.8
million, and recognized a corresponding deferred income tax benefit. The
deferred income tax benefit was somewhat offset by our recognition of a current
income tax liability of approximately $0.9 million associated with the
allocation of our taxable income between the S corporation and the C
corporation. For the six months ended June 30, 1999, we recognized income tax
expense of approximately $1.2 million as a result of our conversion to a C
corporation in 1998.

SEGMENT ANALYSIS

         Our growth and our transition from a brick and mortar branch operation
to one more based on Internet, Call Center and Strategic Alliance mortgage
lending channels may distort some of our ratios and financial statistics and may
make period-to-period comparisons difficult. In light of our growth and our
transition, historical earnings and other financial statistics may be of little
relevance in predicting future performance. Additionally, the sensitivity of
Conventional Loans to interest rates and the effect of interest rates on the
volume of loan production and margins will affect period to period comparisons.

         We expect segment contributions to vary from period to period. In order
to demonstrate the effect that varying factors have on loan production, revenue
and profits, we have elected to show the results of our current business
segments. As described above, effective April 1, 1999,

                                                             Page 25 of 39 pages
<PAGE>   26

we changed the way we manage our business from a product line basis to a
distribution channel basis. The following table shows the contribution to
revenues and expenses and the loan closings of each of our distribution channels
for the three and six months ended June 30, 1998 and 1999:



                                                             Page 26 of 39 pages
<PAGE>   27

<TABLE>
<CAPTION>
                                                           For the Three-Month                 For The Six-Month
                                                           Periods Ended June 30,              Periods Ended June 30,
                                                      ------------------------------      -------------------------------
                                                          1998              1999             1998               1999
                                                      ------------      ------------      -----------        ------------
                                                                               (In thousands)
<S>                                                  <C>                <C>               <C>               <C>
REVENUES:
     Web/Call Center .............................    $   3,126.3        $  3,332.4        $  6,035.8        $    6,915.5
     Branch Network ..............................       19,096.4          12,402.4          35,211.9            29,442.7
     Strategic Alliance
         Program .................................                          1,057.3                               1,057.3
     Other .......................................         (127.9)            130.0            (232.0)             (936.0)
     Eliminations ................................                           (255.2)                                255.2
                                                      -------------      ------------      -----------       --------------
                                                         22,094.8          16,666.9          41,015.7            36,734.7

EXPENSES:
     Web/Call Center .............................        2,145.8           3,430.4           4,165.7             5,842.0
     Branch Network ..............................       12,110.5           8,402.5          22,143.0            18,203.1
     Strategic Alliance
         Program .................................                          1,340.3                               1,085.1
     Other .......................................        2,731.6           4,377.5           5,497.8             8,076.4
     Eliminations ................................                           (255.2)                                255.2
                                                      -------------      -----------       -----------       --------------
                                                         16,987.9          17,550.7          31,806.5            33,461.8

INCOME (LOSS) BEFORE TAXES AND
     MINORITY INTEREST ...........................        5,106.9            (883.8)          9,209.2             3,272.9
MINORITY INTEREST ................................                             84.9                                  84.9
INCOME TAX (EXPENSE) BENEFIT
DUE TO QUARTERLY EARNINGS (LOSS) .................       (1,123.5)            288.0          (1,123.5)           (1,209.0)
INCOME TAX  BENEFIT DUE TO
CONVERSION OF S. CORP ............................          950.9                               950.9
                                                      -------------      -----------       -----------       --------------
NET INCOME (LOSS) BEFORE TAXES AND
MINORITY INTEREST ................................    $   4,934.3         $  (510.9)       $  9,036.6        $    2,148.8
                                                      =============       ===========      ===========       ==============

PROVISION FOR PRO FORMA
     INCOME TAX ..................................        1,736.4                             3,131.1
                                                      -----------                          -----------
PRO FORMA NET INCOME .............................    $   3,370.6                          $  6,078.1
                                                      ===========                          ===========

LOAN CLOSINGS:
    Web/Call Center ..............................    $  44,949           $ 112,195        $   68,152        $  234,573
    Branch Network ...............................      467,103             355,516           925,060           807,312
    Strategic Alliance Program ...................                           56,898                              56,898
                                                      ------------        -----------      -----------       --------------
      Total Loan Closings ........................    $ 512,052           $ 524,609        $  993,212        $1,098,783
                                                      ============        ===========      ===========       ==============
</TABLE>

                                                             Page 27 of 39 pages
<PAGE>   28

THREE MONTHS ENDED JUNE 30, 1999
         VERSUS THREE MONTHS ENDED JUNE 30, 1998

         Revenues decreased in the second quarter of 1999 compared to the second
quarter of 1998 and the contribution by distribution channel differed from
quarter to quarter. In the second quarter of 1999, the Branch Network division
contributed $12.4 million, or 74.4%, of revenues, compared to $19.1 million, or
86.4%, in the second quarter of 1998. The Web/Call Center division contributed
$3.3 million, or 20.0%, of revenues, compared to $3.1 million, or 14.1%, in the
second quarter of 1998. The Strategic Alliance Program, which commenced
operations in April of 1999, contributed $1.1 million, or 6.3%, of revenues in
the second quarter of 1999.

         BRANCH NETWORK: The Branch Network division generated $12.4 million in
revenue in the second quarter of 1999 versus $19.1 million of revenue in the
second quarter of 1998. The 35.1% decrease in revenue is mainly attributable to
a decrease in margins earned on loan fees and gains on sale of Sub-Prime Loans
originated by the Branch Network in the second quarter of 1999 (see "Results of
Operations" for a description of changes in margins), and a 28.2% decrease in
sales of Branch Network loans in the second quarter of 1999 compared to the
second quarter of 1998. The lower loan sales are primarily attributable to a
24.6% decrease in Branch Network loan closings, as a result of an increase in
interest rates and a corresponding decrease in the volume of refinance activity,
along with the shift of some Branch Network loan officers to the Web/Call
Center, and our sale of $7.4 million more Branch Network loans in the second
quarter of 1999 than were disbursed, compared to $31.4 million in the second
quarter of 1998. Due to the branch closings and the continuing increase in
interest rates further dampening the amount of refinance business, we expect
both closings and revenues from our Branch Network to decline in the third and
fourth quarters of 1999 from the first and second quarters of 1999.

         Direct expenses of the Branch Network division were $8.4 million in the
second quarter of 1999 compared to $12.1 million in the second quarter of 1998.
The $3.7 million decrease in direct expenses is primarily attributable to:

         -  reduced commissions, as the mix of products shifted to more
            Conventional Mortgage Loans, which have lower commissions;
         -  a decrease in marketing and advertising from $2.6 million in the
            second quarter of 1998 to $0.5 million in the second quarter of
            1999. The decrease is primarily attributable to discontinuing
            advertising to enhance consumer recognition of the Fresh Start brand
            name and to discontinuing advertising for branches closed in 1999,
            compared to advertising for new branches in 1998; and
         -  a decrease in variable expenses directly associated with closed
            loans.

         WEB/CALL CENTER DIVISION: The Web/Call Center division generated $3.3
million in revenue in the second quarter of 1999 versus $3.1 million of revenue
in the second quarter of 1998. The 6.6% increase in revenue is mainly
attributable to a change in the mix of products originated (see "Results of
Operations" for a description of volumes and margins). In 1998, the primary
product originated was High LTV, compared to 1999 where Conventional Mortgage
Loans were the primary product originated and source of revenue.

                                                             Page 28 of 39 pages
<PAGE>   29

         We anticipate the increasing interest rates that started to occur in
the second quarter of 1999 and continued in the third quarter will decrease the
refinancing of existing mortgages by consumers. The decrease in production is
expected to reduce the profitability of the division.

         Direct expenses of the Web/Call Center division were $3.4 million in
the second quarter of 1999 compared to $2.1 million in the second quarter of
1998. The 59.9% increase in expenses is primarily attributable to the following:

         -  a $0.4 million increase in commissions associated with a 149.6%
            increase in the volume of closed Web/Call Center loans;
         -  $0.3 million of increased marketing expenses in an attempt to brand
            RockLoans.com for the transition to the Web/Call Center origination
            platform; and
         -  increased expenses for personnel costs and occupancy for the
            anticipated growth in our Internet production from the new
            multimillion marketing campaign which was initiated in the third
            quarter of 1999.

         STRATEGIC ALLIANCE PROGRAM: Our Strategic Alliance Program currently
consists of one joint venture, a 70%-owned limited liability company that
originates residential mortgage products to Michigan National Bank's customers
through Michigan National Bank's 192 financial centers, a call center and over
the Internet. Michigan National Bank has approximately 450,000 customers and
owns the other 30% of the joint venture. The Strategic Alliance Program, which
commenced operations April 4, 1999, generated $1.1 million in revenue on loan
sales of $44.7 million in the second quarter of 1999.

         Direct expenses of the Strategic Alliance Program were $1.3 million in
the second quarter of 1999 before intercompany eliminations.

         OTHER: The majority of the Other revenue in the second quarter of 1999
is the fee charged to the joint venture for services rendered by Rock Financial
in accordance with the services agreement, which is eliminated in consolidation.

         Other expenses include expenses not directly allocable to a particular
division, such as the costs associated with our legal, marketing, accounting,
information services, facilities management, servicing, executive, human
resources, secondary marketing and general and administrative support teams. The
majority of the $1.7 million increase in expenses, from $2.7 million in the
second quarter of 1998 to $4.4 million for the second quarter of 1999, is
primarily due to increased costs of technology, marketing and other support
personnel for our Web/Call Center.


                                                             Page 29 of 39 pages
<PAGE>   30

SIX MONTHS ENDED JUNE 30, 1999
         VERSUS SIX MONTHS ENDED JUNE 30, 1998

         Revenues decreased in the first six months of 1999 compared to first
six months of 1998 and the contribution by distribution channel differed from
quarter to quarter. In the first six months of 1999, the Branch Network division
contributed $29.4 million, or 80.1%, of revenues, compared to $35.2 million, or
85.8%, in the first six months of 1998. The Web/Call Center division contributed
$6.9 million, or 18.8%, of revenues, compared to $6.0 million, or 14.7%, in the
first six months of 1998. The Strategic Alliance Program, which commenced
operations in April of 1999, contributed $1.1 million, or 2.9%, of revenues in
the first six months of 1999.

         BRANCH NETWORK: The Branch Network division generated $29.4 million in
revenue in the first six months of 1999 versus $35.2 million of revenue in the
first six months of 1998. The 16.4% decrease in revenue is mainly attributable
to a decrease in margins earned on loan fees and gains on sale of Sub-Prime
Loans originated in the Branch Network in the first six months of 1999 (see
"Results of Operations" for a description of changes in margins). We sold $85.9
million more Branch Network loans in the first six months of 1999 than were
disbursed, compared to $21.0 million in the first six months of 1998.  This
increase was substantially offset by a 12.7% decrease in Branch Network loan
closings in the first six months of 1999 as compared to the first six months of
1998. The lower loan closings are a result of an increase in interest rates and
corresponding decrease in the volume of refinance activity, along with the shift
of some loan officers to the Web/Call Center. Due to the branch closings and the
continuing increase in interest rates further dampening the amount of refinance
business in the first and second quarters of 1999, we expect both closings and
revenues from our Branch Network to decline in the third and fourth quarters of
1999 from the first and second quarters of 1999.

         Direct expenses of the Branch Network division were $18.2 million in
the first six months of 1999 compared to $22.1 million in the first six months
of 1998. The $3.9 million decrease in expenses is primarily attributable to:

         -  a $2.3 million decrease in marketing expense, primarily attributable
            to discontinuing advertising to enhance consumer recognition of the
            Fresh Start brand name and to discontinuing advertising for branches
            closed in 1999, compared to advertising for new branches in 1998;
            and
         -  a $1.5 million decrease in commissions due to more Conventional
            Mortgage loan closings and less Sub-Prime loan closings in 1999
            compared to 1998. Conventional Mortgage loans have lower commissions
            than those paid on Sub-Prime Loans.

         WEB/CALL CENTER DIVISION: The Web/Call Center division generated $6.9
million in revenue in the first six months of 1999 versus $6.0 million of
revenue in the first six months of 1998. The 14.6% increase in revenue is mainly
attributable to a change in the mix of products originated (see "Results of
Operations" for a description of volumes and margins). In 1998, the primary
product originated was High LTV, compared to 1999 where Conventional Mortgage
Loans were the primary product originated and source of revenue.

                                                             Page 30 of 39 pages
<PAGE>   31

         We anticipate the increasing interest rates that started to occur in
the second quarter of 1999 and continued in the third quarter will decrease the
refinancing of existing mortgages by consumers. The decrease in production is
expected to reduce the profitability of the division.

         Direct expenses of the Web/Call Center division were $5.8 million in
the first six months of 1999 compared to $4.2 million in the first six months of
1998. The 40.2% increase is primarily attributable to the following:

         -  a 244.2% increase in the volume of closed Web/Call Center Loans
            which increased commissions by $0.9 million despite to the
            previously discussed change in the mix of products originated.
         -  an increase of $0.7 million in operating expenses mainly attributed
            to the increase in volumes of loans closed and increases in expenses
            for personnel in connection with the anticipated growth in our
            Internet production from the new multi-million dollar marketing
            campaign initiated in the third quarter of 1999; and
         -  increased marketing expenses in an attempt to brand RockLoans.com in
            connection with the transition to an operation more based on
            Web/Call Center and Strategic Alliance distribution channels.

         STRATEGIC ALLIANCE PROGRAM: Our Strategic Alliance Program currently
consists of one joint venture, a 70%-owned limited liability company that
originates residential mortgage products to Michigan National Bank's customers
through Michigan National Bank's 192 financial centers, a call center and over
the Internet. Michigan National Bank has approximately 450,000 customers and
owns the other 30% of the joint venture. The Strategic Alliance Program, which
commenced operations April 4, 1999, generated $1.1 million in revenue on loan
sales of $44.7 million in the second quarter of 1999.

         Direct expenses of the Strategic Alliance Program were $1.3 million in
the second quarter of 1999 before intercompany eliminations.

         OTHER: The majority of the Other revenue in the first six months of
1999 is the fee charged to the joint venture for services rendered by Rock
Financial in accordance with the services agreement, which is eliminated in
consolidation.

         Other expenses include expenses not directly allocable to a particular
division, such as the costs associated with our legal, marketing, accounting,
information services, facilities management, servicing, executive, human
resources, secondary marketing and general and administrative support teams. The
majority of the $2.6 million increase in expenses, from $5.5 million in the
first six months of 1998 to $8.1 million for the first six months of 1999, is
primarily due to increased costs of technology, marketing and other support
personnel for our Web/Call Center.

                                                             Page 31 of 39 pages
<PAGE>   32

LIQUIDITY AND CAPITAL RESOURCES

         Net cash provided by operating activities in the first six months of
1999 was approximately $75.9 million, compared to approximately $55.4 million in
the first six months of 1998. Cash was provided primarily by the following:

- our net income in the first six months of 1999, approximately $5.1 million
  before depreciation and amortization, provision for credit losses, and
  deferred income taxes in the first six months of 1999, compared to
  approximately $8.8 million in the first six months of 1998;
- a decrease in mortgage loans held for sale of approximately $73.7 million in
  the first six months of 1999, compared to an approximately $29.7 million
  decrease in the first six months of 1998; and
- an increase in drafts payable, which represent funds advanced for loan
  closings that have not yet been drawn against the warehouse line of credit of
  approximately $5.1 million in the first six months of 1999, compared to an
  increase of approximately $12.3 million in the first six months of 1998.

These sources of cash were partially offset by the following:

- an increase in prepaid federal income tax of $3.8 million in the first six
  months of 1999, as a result of stock options exercised;

- an increase in other assets of approximately $0.8 million in the first six
  months of 1999, compared to a decrease of approximately $0.1 million, as a
  result of increases in deposits and other prepaid items; and

- a decrease in accounts payable and accrued expenses and other liabilities of
  approximately $3.4 million in the first six months of 1999, compared to an
  increase of approximately $4.5 million in the first six months of 1998,
  primarily as a result of the decrease in loan closings from the fourth quarter
  of 1998 to the second quarter of 1999.

         Net cash used in investing activities during the first six months of
1999 was approximately $0.5 million, compared to approximately $2.7 million used
in investing activities during the first six months of 1998. Cash was primarily
used to purchase property and equipment of approximately $1.2 million in the
first six months of 1999, compared to $3.5 million in the first six months of
1998 and for the increase in real estate owned and loans held for investment of
approximately $0.3 million in the first six months of 1999, compared to $0.8
million in the first six months of 1998. These uses of cash were partially
offset by the repayment of approximately $1.0 million of shareholder advances in
the first six months of 1999, compared to $1.6 million in the first six months
of 1998.

         Net cash used in financing activities during the first six months of
1999 was approximately $70.1 million, compared to approximately $62.6 million
during the first six months of 1998. Cash was used for the following:

- repayments of borrowings under our warehouse line of credit of approximately
  $68.1 million in the first six months of 1999, compared to approximately $52.2
  million in the first six months of 1998;


                                                             Page 32 of 39 pages

<PAGE>   33

- repayments of borrowings under our reverse repurchase agreement of
  approximately $11.5 million in the first six months of 1999, compared to
  approximately $15.8 million in the first six months of 1998; and

- payment of dividends to shareholders of approximately $0.6 million in the
  first six months of 1999, compared to approximately $0.3 million in the first
  six months of 1998. In July 1999, the Board of Directors determined not to pay
  a dividend in the third quarter of 1999.

These uses of cash were partially offset by the proceeds from the exercise of
stock options of approximately $9.8 million in the first six months of 1999,
compared to $1.5 million in the first six months of 1998, and $0.3 million
minority interest investment received from Michigan National Bank for our joint
venture in the first six months of 1999. We normally use our cash to pay down
our warehouse borrowings. In order to demonstrate the availability of this
liquidity, we borrowed additional cash under our warehouse line of credit at
June 30, 1999 for three days.

         We have $450 million of warehouse financing facilities, which includes
a $50 million warehouse financing facility of our subsidiary, Rock Home Loans at
Michigan National. Our warehouse line of credit currently provides for up to
$200 million principal amount of demand loans secured by loans held for sale and
other of our assets. Loans under the warehouse line of credit bear interest at
rates that vary depending on the type of underlying loan, and the loans are
subject to sublimits, advance rates and warehouse terms that vary depending on
the type of underlying loan. The effective weighted average interest rate for
this arrangement in the first six months of 1999 was 6.31%. As of July 30, 1999,
we had borrowed $11.3 million under this facility and had a maximum of $29.5
million available for additional borrowings and were in compliance with all
associated financial covenants. We would have $188.7 million of borrowing
capacity available if we had sufficient collateral.

         In addition to the $200 million warehouse line of credit, our reverse
repurchase arrangement provides that the lender, an affiliate of one of the
representatives of the underwriters in our initial public offering, will
purchase from us at par up to $200 million of fully-amortizing, first or junior
lien residential mortgage loans and home equity loans that comply with our
origination guidelines and conform to whole and bulk loan sale requirements. The
lender's obligations are subject to our agreement to repurchase loans on a daily
basis. This agreement is not a committed facility and the lender may elect to
discontinue the repurchase agreement at any time. The term of any financing
under the repurchase agreement matures and may be renewed on a daily basis. In
any event, the arrangement terminates in March 2000. The effective weighted
average interest rate to us of this arrangement in the first six months of 1999
was 5.92%. We use this facility as a supplemental borrowing facility to fund
loans we close until they are sold. As of July 30, 1999, we had not financed any
loans under this facility and had no additional borrowings available to draw
against. We would have an additional $200 million of borrowing capacity if we
had sufficient collateral.

         Our subsidiary, Rock Home Loans at Michigan National, has $50 million
of warehouse financing facilities. Its warehouse line of credit currently
provides for up to $50 million principal amount of demand loans secured by loans
held for sale and other of its assets. Loans under the warehouse line of credit
bear interest at rates that vary depending on the type of underlying loan, and
the loans are subject to sublimits, advance rates and warehouse terms that vary
depending on the type of underlying loan. The effective weighted average
interest rate for this arrangement in


                                                             Page 33 of 39 pages
<PAGE>   34

the second quarter of 1999 was 5.92%. As of July 30, 1999, $5.2 million had
been borrowed under this facility and had no additional borrowings were
available to draw against and were in compliance with all associated financial
covenants. It would have $44.8 million of borrowing capacity available if it had
sufficient collateral.

         Our warehouse financing facilities, together with cash flows from
operations, are expected to be sufficient to fund our liquidity requirements for
the next 12 months, if our future operations are consistent with our
expectations. We, however, expect that eventually we will need to arrange for
additional sources of capital through the issuance of debt, equity or additional
bank borrowings. We have no commitments for any such additional financing, and
we cannot assure you that we will be able to obtain any such additional
financing at the times required and on terms and conditions acceptable to us. In
such event, our growth and operations could be curtailed. If we begin to
securitize our assets or significantly increase our retained mortgage servicing
rights, our liquidity could be materially adversely affected, although we have
no current intention to do either in the immediate future.

NEW ACCOUNTING STANDARDS NET YET ADOPTED

         In September 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("Statement 133"). Statement 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Statement 133 requires companies to
record derivatives on the balance sheet as assets or liabilities, measured at
fair value. Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of the derivative and
whether it qualifies for hedge accounting. Upon initial application, hedging
relationships must be designated anew and documented pursuant to the provisions
of Statement 133.

         In June 1999, the Financial Accounting Standards Board issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of
the Effective Date of FASB Statement No. 133" ("Statement 137"). Statement 137
amends the effective date of Statement 133. Statement 133 will now be effective
for all fiscal quarters of all fiscal years beginning after June 15, 2000.
Management has not yet evaluated the impact of the implementation of Statement
133.

                                                             Page 34 of 39 pages
<PAGE>   35

YEAR 2000 DISCLOSURE

STATE OF READINESS

         We have developed a Year 2000 project plan that addresses both
technological and non-technological systems, including embedded systems for all
business units. We have designated a Year 2000 project team to lead the efforts
using a phased approach. We employ both internal and external resources to
identify, correct and test systems to achieve Year 2000 compliance. We are also
reviewing the Year 2000 readiness of third parties that provide services
essential to our operations.

         The plan consists of nine phases. The initial phases of planning,
awareness, inventory, triage, detailed assessment, resolution, test planning and
testing are complete. The deployment phase includes the installation of
compliant hardware and software into the production environment. This phase has
begun and many of the mission critical systems have been upgraded or replaced
with compliant systems. We expect to compete this phase by September 1, 1999. We
are communicating with key third party suppliers and other business partners to
establish and monitor their levels of Year 2000 readiness. Our Year 2000 project
is subject to modification, and we may revise it periodically as we further
develop information. We believe we will complete our project without any
material adverse effects.

ESTIMATED COST

         Our cost estimates are in the range of $300,000 to $500,000. As of June
30, 1999, we have incurred approximately $290,000 of costs. We continually
review our cost estimates and adjust them, if appropriate. We do not expect our
Year 2000 project cost to have a material impact on our liquidity or capital
resources.

RISKS OF OUR YEAR 2000 ISSUES

         Based on current information, we believe the Year 2000 problem will not
have a material adverse effect on us, our business or our financial condition.
We cannot predict the actual effect of the Year 2000 problem on us. Many
uncertainties exist as to whether broad-based or systemic economic failures may
occur.

YEAR 2000 CONTINGENCY PLANS

         We are reviewing existing contingency plans for potential modifications
to address specific Year 2000 issues. Our key operational systems are being
reviewed and strengthened to address business continuity requirements. Business
continuity plans will include the development of back-up processes that would be
implemented in the event of system failures, for example, the ability to provide
government reporting manually versus electronically. The contingency planning
process will continue as modifications are made and as the status of third party
readiness becomes better known.

                                                             Page 35 of 39 pages

<PAGE>   36

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Interest rate risk is the largest market risk affecting us. Interest
rate risk is the possibility that changes in interest rates will cause
unfavorable changes in our net income and in the value of our interest rate
sensitive assets, liabilities and commitments. As part of our risk management
programs, we purchase financial instruments and enter into financial agreements
with off-balance sheet risk in the normal course of business to manage our
exposure to interest rate risk with respect to our Conventional Loans and our
government-insured loans (together, "Prime Loans"), but not with respect to our
Sub-Prime Loans or Home Equity Lines of Credit. We use these financial
instruments for the explicit purpose of managing interest rate risks to protect
the value of our Prime Loans held for sale and the Prime Loan commitment
pipeline. We use financial instruments that tend to decrease in value as
interest rates decline and increase in value as interest rates rise, which acts
as an offset to the behavior of the underlying Prime Loans held for sale and
Prime Loan pipeline.

         Management actively monitors and manages our exposure to interest rate
risk on Prime Loans, which is incurred in the normal course of business. The
committed and closed pipelines of Prime Loans, as well as the related forward
commitments and derivatives, are valued daily. We refer to the loans, pipeline,
commitments and derivatives together as the "hedge position". The hedge position
is "shocked" against a spectrum of interest rate scenarios to evaluate expected
net changes of the fair values of the hedge position in relation to the changes
in interest rates. We do not enter into instruments for trading purposes.

         We evaluate interest rate risk exposure using both static shock and
option adjusted spread models to estimate changes to the fair value of the hedge
position. Both modeling techniques measure net changes in the fair value to the
underlying assets and commitments by determining the present value of the cash
flow of the underlying mortgage or debt instrument discounted at the interest
rate assumed to be required by an investor to yield a market rate of return.
Both modeling techniques measure changes in the fair value of derivatives
through Option Adjusted Spread calculations to determine the present value using
implied volatility, discount rates and expected life of the derivative. Both
models use assumptions regarding the amount of commitments that close, given an
incremental shift of +/- 100 basis points, in 12.5 basis point increments, to
the yield curve. The assumptions are based on our historical experience. Our
exposure is analyzed daily and reviewed at least monthly by the Secondary
Marketing Executive Committee, which includes in its membership our Director of
Secondary Marketing, our Chief Financial Officer, our President, and our
Chairman of the Board and Chief Executive Officer.

         Both modeling techniques described above were applied to the hedge
position as of June 30, 1999 over a spectrum of interest rate changes to
evaluate the change in the hedge position's fair value ("sensitivity analysis").
Using the results of the model producing the largest loss in fair value, the
sensitivity analysis reflected that an instantaneous 50 basis point increase in
interest rates at June 30, 1999, determined by management to reflect a
reasonably possible near-term change, would have reduced the fair value of the
hedge position 9 basis points from 2.15% to 2.06% and would have decreased
revenue by approximately $82,000 even though the model  assumes that more loans
would have closed due to an increase in interest rates. A 50 basis point
decrease in interest rates at June 30, 1999, determined by management to reflect
a reasonably

                                                             Page 36 of 39 pages
<PAGE>   37

possible near-term change, would have decreased the fair value of the hedge
position 2 basis points from 2.15% to 2.13% and would have decreased revenue
by approximately $6,000 assuming that fewer loans would have closed due
to the decline in interest rates. Both 50 basis point moves are assumed shifts
in the entire yield curve. We do not believe that our spread income would be
materially affected by interest rate changes as the interest we charge on our
mortgage loans can change faster than the interest on our indebtedness.

         The table below provides information about our other financial
instruments that are sensitive to changes in interest rates, including debt
obligations and Sub-Prime Loans, as of June 30, 1999. For both debt obligations
and Sub-Prime Loans, the table presents principal cash flows and related
weighted average interest rates by expected maturity dates. Weighted average
variable rates are based on current rates as of June 30, 1999. The instruments'
actual cash flows are all denominated in U.S. dollars.

<TABLE>
<CAPTION>
                                                  JUNE 30, 1999
                                              EXPECTED MATURITY DATE
(AMOUNTS IN THOUSANDS)                     1999      2000-2003  THEREAFTER    TOTAL       FAIR VALUE
                                       --------------------------------------------------------------
<S>                                       <C>          <C>        <C>       <C>           <C>
               ASSETS:

SUB-PRIME LOANS                           $ 7,532       $ 0        $ 0       $ 7,532       $ 8,097
WEIGHTED AVERAGE INTEREST
 RATE:                                     11.79%         NA         NA         11.79%


            LIABILITIES:

WAREHOUSE LINE OF CREDIT                  $29,896       $ 0        $ 0       $29,896       $29,896
WEIGHTED AVERAGE INTEREST
 RATE:                                      6.12%        NA         NA         6.12%
REVERSE REPURCHASE  ARRANGEMENT           $     0       $ 0        $ 0       $     0       $     0
WEIGHTED AVERAGE INTEREST
 RATE:                                         NA        NA         NA            NA
</TABLE>

                                                             Page 37 of 39 pages

<PAGE>   38
                           PART II--OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Our Annual Meeting of Shareholders was held on May 25, 1999. At the
Annual Meeting, Gary L. Gilbert and Robert V. Schechter were elected as
Directors of the Company for a three-year term. The terms of office of David
Katzman, Daniel Gilbert, and David A. Brandon as Directors of the Company
continued after the meeting. 11,649,812 votes were cast for Gary L. Gilbert's
election and 2,087,614 votes were withheld. 13,729,610 votes were cast for
Robert V. Schechter's election and 7,816 votes were withheld. There were no
abstentions or broker non-votes in connection with the election of the Directors
at the Annual Meeting.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits.

           10.1   Employment Agreement, dated as of June 14, 1999 between Rock
                  Financial Corporation and Michael D. Hollerbach.

           10.2   Mortgage Warehousing Agreement, dated as of April 4, 1999,
                  between Rock Home Loans at Michigan National, LLC and Michigan
                  National Bank.

           27.1   Financial Data Schedule.

     (b)  Reports on Form 8-K.

                 No reports on Form 8-K were filed by the Registrant during the
         quarter for which this report is filed.



                                                             Page 38 of 39 pages

<PAGE>   39

                                   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.

                                      ROCK FINANCIAL CORPORATION
                                           (Registrant)

Date:  August 16, 1999                By:/s/ MICHAEL D. HOLLERBACH
                                         --------------------------------------
                                              Michael D. Hollerbach
                                              Its:   President
                                              (Duly Authorized Officer)


Date:  August 16, 1999                By:/s/ FRANK E. PLENSKOFSKI
                                         --------------------------------------
                                              FRANK E. PLENSKOFSKI
                                              Its:     Chief Financial Officer
                                              (Principal Financial and Chief
                                               Accounting Officer)


                                                             Page 39 of 39 pages
<PAGE>   40


                                  EXHIBIT INDEX

Exhibit           Description
-------           -----------
10.1              Employment Agreement, dated as of June 14, 1999 between Rock
                  Financial Corporation and Michael D. Hollerbach
10.2              Mortgage Warehousing Agreement, dated as of April 4, 1999,
                  between Rock Home Loans at Michigan National, LLC and Michigan
                  National Bank.
27.1              Financial data schedule.