SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                          ---------------------------

                                   FORM 10-QSB


(Mark One)

[X}  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934

     For the quarterly period ended March 31, 1999
                                    --------------

                                       OR

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

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

                           Commission File No. 0-25149


                            Ridgewood Financial, Inc.
--------------------------------------------------------------------------------
        (Exact name of Small Business Issuer as Specified in Its Charter)


         New Jersey                                     22-3616280    
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation        (I.R.S. Employer
 or Organization)                                   Identification No.)  

               55 North Broad Street, Ridgewood, New Jersey 07450
               --------------------------------------------------
                    (Address of Principal Executive Offices)


                                 (201) 445-7887
--------------------------------------------------------------------------------
                 Issuer's Telephone Number, Including Area Code

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or 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 shares of Common Stock outstanding as of May 12, 1999: 3,180,000


Transitional Small Business Disclosure Format (check one)

                                 YES           NO   X
                                      ---          ---



<PAGE>

                            RIDGEWOOD FINANCIAL, INC.

                                    Contents
                                    --------

                                                                         Page(s)
                                                                         -------
PART I - FINANCIAL INFORMATION

         Item 1.   Consolidated Financial Statements..........................3

         Item 2.   Management's Discussion and Analysis .....................12

PART II - OTHER INFORMATION

         Item 1.   Legal Proceedings.........................................20

         Item 2.   Changes in Securities and Use of Proceeds.................20

         Item 3.   Defaults upon Senior Securities...........................20

         Item 4.   Submission of Matters to a Vote of Security Holders.......20

         Item 5.   Other Information.........................................20

         Item 6.   Exhibits and Reports on Form 8-K..........................20

         Signatures..........................................................21


<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


         Ridgewood Financial Inc.
         Consolidated Statements of Financial Condition
         March 31, 1999 and December 31, 1998
         (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                              March 31,            December 31,
                                                                 1999                 1998
                                                             -----------           ------------
                                                             (unaudited)
<S>                                                        <C>                    <C>      
Assets:                                                       
Cash and due from banks                                       $   2,364             $   2,274
Federal funds sold                                               13,500                41,200
                                                              ---------             ---------
Cash and cash equivalents                                        15,864                43,474
Investment securities:
Held to maturity (fair value of $1,237 and 
   $1,374 at March 31, 1999 and December
   31, 1998, respectively)                                        1,216                 1,354
Available for sale                                               32,409                16,921
Mortgage-backed securities:
Held to maturity (fair value of $10,721 
   and $11,409 at March 31, 1999 and
   December 31, 1998, respectively)                              10,641                11,277
Available for sale                                               75,756                88,390
Loans receivable, net                                           114,502               107,021
Accrued interest receivable                                       1,427                 1,387
Premises and equipment, net                                       6,195                 2,218
Federal Home Loan Bank ("FHLB") stock, at cost                    1,949                 1,949
Other assets                                                        480                   742
                                                              ---------             ---------
     Total assets                                             $ 260,439             $ 274,733
                                                              =========             =========

Liabilities And Stockholders' Equity:
Deposits                                                        195,545               205,529
Borrowed funds                                                   37,044                32,557
Initial public offering subscriptions payable                         -                17,809
Advances from borrowers for taxes and insurance                   1,013                   926
Accounts payable and other liabilities                              459                   490
                                                              ---------             ---------
    Total liabilities                                           234,061               257,311


Stockholders' Equity:
Preferred stock, authorized 5,000,000 shares,
  None issued and outstanding                                         -                     -
Common stock, $0.10 Par Value,
  Authorized Shares 10,000,000
  Issued 3,180,000 in 1999 and none in 1998,
  Outstanding Shares 3,180,000 in 1999
    and none in 1998                                                318                     -
Additional paid-in capital                                        9,431                     -
Retained earnings                                                17,674                17,693
Unallocated common stock owned by
   employee stock ownership plan                                   (574)                    -
Accumulated other comprehensive (loss) 
   income                                                          (471)                 (271)
                                                              ---------             ---------
Total stockholders' equity                                       26,378                17,422
                                                              ---------             ---------
     Total Liabilities and Stockholders' Equity               $ 260,439             $ 274,733
                                                              =========             =========
</TABLE>

See accompanying notes to consolidated financial statements.


                                        3
<PAGE>

                            Ridgewood Financial, Inc.
                        Consolidated Statements of Income
                        (In Thousands, Except Share Data)
<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                             March 31,
                                                                      -----------------------
                                                                         1999         1998
                                                                      ----------   ----------
                                                                            (unaudited)
<S>                                                                   <C>          <C>    
Interest Income:
  Loans receivable                                                       $ 2,107      $ 2,069
  Investment securities                                                       15          129
  Mortgage-backed securities                                                 177          250
  Securities available for sale                                            1,458        1,219
  Other                                                                      307          248
                                                                      ----------   ----------
     Total interest income                                                 4,064        3,915
                                                                      ----------   ----------

Interest Expense:
  Deposits                                                                 2,291        2,377
  Borrowed fund                                                              457          206
                                                                      ----------   ----------
     Total interest expense                                                2,748        2,583
                                                                      ----------   ----------

     Net interest income                                                   1,316        1,332
Provision for loan losses                                                     36            3
                                                                      ----------   ----------
     Net interest income after provision for loan losses                   1,280        1,329
                                                                      ----------   ----------

Noninterest income:
  Fees and service charges                                                    36           36
  Gain on sale of securities                                                   -            8
  Gain on sale of loans                                                        -           21
  Other                                                                        1            -
                                                                      ----------   ----------
     Total noninterest income                                                 37           65
                                                                      ----------   ----------

Noninterest expenses:
  Salaries and benefits                                                      609          494
  Occupancy and equipment                                                    315          254
  Advertising and promotion                                                   27           31
  SAIF deposit insurance premium                                              30           29
  Other expenses                                                             155           93
                                                                      ----------   ----------
     Total noninterest expense                                             1,136          901
                                                                      ----------   ----------

     Income before income taxes                                              181          493
Income taxes                                                                   -          154
                                                                      ==========   ==========
     Net income                                                            $ 181        $ 339
                                                                      ==========   ==========

Earnings per common share:
  Basic                                                                   $ 0.06        $   -
                                                                      ==========   ==========
  Diluted                                                                 $ 0.06        $   -
                                                                      ==========   ==========

Weighted average shares outstanding:
  Basic                                                                3,138,912            -
  Diluted                                                              3,138,912            -


</TABLE>

See accompanying notes to consolidated financial statements.


                                        4
<PAGE>

                            Ridgewood Financial, Inc.
                      Consolidated Statements of Cash Flows
                    For the Three Months Ended March 31, 1999
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     March 31,
                                                                             ----------------------
                                                                                 1999       1998
                                                                             ----------   ---------
<S>                                                                           <C>         <C>     
Cash flows from Operating Activities:
  Net Income                                                                   $    181    $    339
  Adjustments to reconcile net income to net cash provided
  by operating activities:
  Depreciation                                                                       57          50
  Amortization of loan fees                                                         (67)        (31)
  Premiums and discounts on mortgage-backed and
  investment securities                                                             400         238
  Proceeds from loan sales                                                         --           771
  Gain on sale of loans                                                            --           (21)
  Gain on sale of securities available for sale                                    --            (8)
  Provision for loan losses                                                          36           3
  Allocation of employee stock ownership shares                                      25        --
  Deferred income tax expense (benefit)                                             235        (251)
  (Increase) decrease in accrued interest receivable                                (40)        358
  Decrease in other assets, net                                                     137         248
  Decrease in initial public offering subscriptions payable                     (17,809)       --
  Increase in other liabilities                                                     (31)        (38)
                                                                               --------    --------
        Net cash (used in) provided by operating activities                     (16,876)      1,658
                                                                               --------    --------

Cash flows from investing activities:
  Net increase in first mortgage loans                                           (8,238)        (30)
  Net decrease (increase) in consumer loans                                         766         (54)
  Purchases of mortgage-backed securities available for sale                       --       (21,558)
  Principal collected on mortgage-backed securities                              12,854       3,430
  Purchases of investment securities available for sale                         (15,771)       --
  Maturities and calls of investment securities held to maturity                   --        14,206
  Principal collected on investment securities                                      127       2,992
  Purchases of premises and equipment                                            (4,034)         (6)
  Proceeds from collection of loan fees                                              22        --
                                                                               --------    --------
        Net cash used in investing activities                                   (14,274)     (1,020)
                                                                               --------    --------

Cash flows from financing activities:
  Net (decrease) increase in passbook, NOW and money market
  Accounts                                                                       (2,706)      2,155
  Net (decrease) increase in certificates of deposit                             (7,278)      1,847
  Proceeds from borrowed funds                                                    4,487       9,363
  Repayment of borrowed funds                                                      --       (11,000)
  Net proceeds from initial public offering                                       9,751        --
  Purchase of employee stock ownership plan stock                                  (601)       --
  Capitalization of mutual holding company                                         (200)       --
  Net increase (decrease) in advances from borrowers for taxes and insurance         87          (8)
                                                                               --------    --------
        Net cash provided by financing activities                                 3,540       2,357
                                                                               --------    --------
        Net (decrease) increase in cash and cash equivalents                    (27,610)      2,995
Cash and cash equivalents at beginning of period                                 43,474      15,398
                                                                               ========    ========
Cash and cash equivalents at end of period                                     $ 15,864    $ 18,393
                                                                               ========    ========


Supplemental disclosures of cash flow information
Cash payments for:
  Interest on deposits and borrowed funds                                      $  2,782    $  2,735
  Income taxes                                                                      477         370


</TABLE>

See accompanying notes to consolidated financial statements.




                                        5
<PAGE>


                            RIDGEWOOD FINANCIAL, INC.
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

(1)      Basis of Presentation

The accompanying  unaudited  consolidated  financial statements were prepared in
accordance  with  instructions  for Form 10-QSB and therefore do not include all
disclosures necessary for a complete presentation of the consolidated  financial
statements in conformity with generally accepted accounting principles. However,
all adjustments which are, in the opinion of management,  necessary for the fair
presentation of the interim  financial  statements have been included.  All such
adjustments are of a normal recurring  nature.  The  consolidated  statements of
income are not  necessarily  indicative of results which may be expected for the
entire year.

Certain information and footnote  disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted  pursuant to the rules and  regulations  of the
Securities  and  Exchange  Commission.  It is  suggested  that  these  condensed
unaudited  financial  statement be read in conjunction  with the Form 10-KSB for
the year ended December 31, 1998.

(2)      Conversion and Reorganization

On June 22, 1998, the Board of Directors of Ridgewood Savings Bank of New Jersey
(the Bank) adopted a Plan of  Conversion to convert from a New Jersey  chartered
mutual  savings bank to a New Jersey  chartered  stock savings bank. The Bank is
now a wholly-owned  subsidiary of Ridgewood  Financial,  Inc. (the  Company),  a
holding company formed by the Bank.

The Company is a savings bank holding company that was incorporated in July 1998
under the laws of the State of New Jersey for the  purpose of  acquiring  all of
the issued and outstanding  common stock of the Bank. This acquisition  occurred
in January 1999, at the time the Bank simultaneously  converted from a mutual to
a stock  institution  and  sold  all of its  outstanding  capital  stock  to the
Company.  The Company  made its  initial  public  offering  of common  stock and
provided additional shares of common stock to Ridgewood Financial, MHC, a mutual
holding company that holds 53% of the outstanding shares of the Company. Because
the  reorganization  and conversion was not completed  until January 7, 1999, at
December 31, 1998, the Company had no assets, liabilities or equity.

The reorganization and conversion,  including the initial public offering of the
common stock of the Company,  was completed on January 7, 1999, resulting in the
issuance of 3,180,000 shares of common stock,  $0.10 par value per share, of the
Company of which 1,494,600  shares (47%) were sold at a purchase price per share
of $7.00 and  1,685,400  shares (53%) were issued to Ridgewood  Financial,  MHC,
resulting in gross proceeds of $10.5 million.  Total expenses were approximately
$700,000 resulting in net proceeds of $9.8 million.

Approximately  half of the net proceeds were paid directly by the Company to the
Bank in return for 100,000 shares of common stock, $2.00 par value per share, of
the Bank (100% of the issued and  outstanding  shares of the Bank). In addition,
$200,000 was provided to Ridgewood Financial, MHC by the Bank. The remaining net
proceeds were retained by the Company.

Concurrent with the conversion and  reorganization,  the Company  established an
Employee Stock Ownership Plan (ESOP) for the benefit of employees. The ESOP will
purchase 8% of the number of shares sold in the  offering,  in the open  market,
using a loan  from  the  Company.

                                       6
<PAGE>


In addition,  a stock option plan will be submitted for stockholders'  approval.
If implemented,  up to 10% of the number of shares sold in the offering would be
reserved for issuance through exercise of options for common stock.

As part of the conversion,  5,000,000  shares of preferred stock at no par value
were  authorized;  however,  none were issued.  Included in the Bank's financial
statements  at December  31,  1998 was $17.8  million of  subscriptions  payable
related to the offering.

Upon a complete liquidation of the Bank after the conversion,  the Company, as a
holder of the Bank's common stock would be entitled to any assets remaining upon
a liquidation of the Bank.  Each depositor  would not have a claim in the assets
of the  Bank.  However,  upon  a  complete  liquidation  of the  MHC  after  the
conversion, each depositor would have a claim up to the pro rata value of his or
her  accounts,  in the  assets  of the MHC  remaining  after  the  claims of the
creditors of the MHC are satisfied.  Depositors who have  liquidation  rights in
the Bank  immediately  prior to the conversion will continue to have such rights
in the MHC after the conversion for so long as they maintain deposit accounts in
the Bank after the conversion.

Costs incurred that were directly  associated  with the conversion were deferred
as of December 31, 1998 and were  deducted  from the proceeds of the shares sold
in the conversion in January 1999.

(3)      Earnings Per Common Share

Basic income per common share is computed by dividing net income by the weighted
average number of shares outstanding during each period.

Diluted net income per common  share is  computed by dividing  net income by the
weighted  average  number of shares  outstanding,  as  adjusted  for the assumed
exercise of options for common stock, using the treasury stock method.

                                       7

<PAGE>


(4)      Investment Securities

The  following is a summary of  maturities  of the  investment  securities as of
March 31, 1999 and December 31, 1998 (in thousands):

<TABLE>
<CAPTION>
                                                   March 31, 1999                                     December 31, 1999
                                    -----------------------------------------------     --------------------------------------------
                                                     (Unaudited)
                                      Securities held          Securities available        Securities held      Securities available
                                         to Maturity                for sale                   to Maturity            for sale
                                    ----------------------     --------------------     ---------------------   --------------------
                                     Amortized     Fair        Amortized     Fair       Amortized      Fair      Amortized    Fair
                                       Cost        Value          Cost       Value         Cost        Value       Cost       Value
                                    ----------    --------     ---------  ---------     ---------    --------    ---------  --------
<S>                                <C>           <C>         <C>           <C>         <C>            <C>        <C>        <C>   
Amounts maturing in:                

Equity Securities                     $     --          --            8         28      $     --          --           8         30
One year or less                            73          73           --         --            58          58           -         --
After one year through five years          559         575        3,962      3,952            43          43       3,243      3,243
After five years through ten years          --          --        3,987      3,983           659         675         718        721
After ten years                            584         589       24,550     24,446           594         598      12,769     12,927
                                      --------       -----      -------     ------      --------      ------      ------    -------
                                      $  1,216       1,237       32,507     32,409      $  1,354       1,374      16,738     16,921
                                      ========       =====       ======     ======      ========      ======      ======    =======
</TABLE>

                                       8
<PAGE>


Expected  maturities will differ from contractual  maturities  because borrowers
may have  the  right  to call or  prepay  obligations  with or  without  call or
prepayment penalties.

(5)     Mortgage-backed Securities

The following is a summary of maturities of the  mortgaged-backed  securities as
of March 31, 1999 and December 31, 1998 (in thousands):

<TABLE>
<CAPTION>

                                                     March 31, 1999                                  December 31, 1999
                                      ---------------------------------------------     ------------------------------------------
                                                      (Unaudited)
                                          Securities held      Securities available       Securities held    Securities available
                                            to Maturity             for sale                to Maturity            for sale
                                      ----------------------   --------------------     -------------------  ---------------------
                                      Amortized      Fair      Amortized    Fair        Amortized    Fair    Amortized     Fair
                                         Cost        Value       Cost      Value          Cost      Value      Cost        Value
                                      ----------   ---------   ---------  --------      ---------  --------  ---------    --------
<S>                                  <C>         <C>           <C>        <C>         <C>         <C>       <C>         <C>   
                                   
Amounts maturing in:
One year or less                        $    --          --         --         --       $    --         --       709         708
After one year through five years           948         960      6,535      6,564            --         --     3,882       3,900
After five years through ten years          609         606     18,610     18,528         1,223      1,247    18,693      18,664
After ten years                           9,084       9,155     51,249     50,664        10,054     10,162    65,713      65,118
                                        -------      ------    -------     ------       -------     ------    ------      ------
                                        $10,641      10,721     76,394     75,756       $11,277     11,409    88,997      88,390
                                        =======      ======     ======     ======       =======     ======    ======      ======
</TABLE>

                                       9

<PAGE>


(6)     Borrowed Funds

Borrowed funds at March 31, 1999 and December 31, 1998 are summarized as follows
(in thousands):



                                March 31, 1999          December 31, 1998
                              ------------------     -----------------------
                                 (unaudited)

Advances from the FHLB         $          37,044      $               32,557
                              ==================     =======================

Pursuant to  collateral  agreements  with the FHLB,  advances are secured by all
stock in the FHLB and  qualifying  first mortgage  loans.  Advances at March 31,
1999 and December 31, 1998 have maturity dates as follows: (in thousands)


                          March 31, 1999             December 31, 1998
                       -------------------         ---------------------
                           (unaudited)

              1999     $            1,000          $                  -
              2000                  3,000                         2,500
              2001                  2,000                         2,000
              2002                  4,000                         4,000
              2003                  5,500                         5,500
              2004                  3,000                             -
              2005                  2,000                         2,000
              2006                    544                           557
              2008                 16,000                        16,000
                       ------------------          --------------------   
                       $           37,044          $             32,557
                       ------------------          --------------------

(7)     Comprehensive (loss) income

Total comprehensive income amounted to the following for the three-month periods
ended March 31 (in thousands):


                                                        1999         1998
                                                       ------       ------

Net income                                             $ 181        $  339
Change in unrealized gain on securities
 available for sale, net of taxes                       (200)          216
                                                       -----        ------

Comprehensive (loss) income                            $ (19)       $  555
                                                       -----        ------

                                       10

<PAGE>

(8)      Recent accounting pronouncements

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities"  ("Statement
No. 133").  This statement  establishes  accounting and reporting  standards for
derivative instruments, and for hedging activities. Statement No. 133 supersedes
the disclosure requirements in Statements No. 80, 105 and 119. This statement is
effective for periods  beginning  after June 15, 1999. The adoption of Statement
No. 133 is not expected to have a material  impact on the financial  position or
results of the Company.

In October 1998, the FASB issued Statement of Financial Accounting Standards No.
134 "Accounting for Mortgage-Backed Securities Retained after the Securitization
of Mortgage Loans Held for Sale by a Mortgage  Banking  Enterprise"  ("Statement
No. 134").  This statement  amends FASB Statement No. 65 "Accounting for Certain
Mortgage  Banking  Activities",  to  require  that after the  securitization  of
mortgage loans held for sale, an entity engaged in mortgage  banking  activities
classify the resulting  mortgage-backed  securities or other retained  interests
based on its ability and intent to sell or hold those investments. Statement No.
134 is effective January 1, 1999. The adoption of this statement is not expected
to have a material impact on the financial  position or results of operations of
the Company.

                                       11

<PAGE>

                  Item 2. Management's Discussion and Analysis

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

         The  Company's  results of operations  are  primarily  dependent on the
operations of the Bank. The Bank's results of operations are primarily dependent
on its net interest income,  which is the difference between the interest income
earned on assets, primarily loans, mortgage-backed securities,  investments, and
other interest  earning assets,  less the interest  expense on its  liabilities,
primarily  deposits  and  borrowings.   Net  interest  income  may  be  affected
significantly by general economic and competitive conditions, particularly those
with respect to market  interest  rates,  and policies of  regulatory  agencies.
Furthermore,  the Bank's lending  activity is  concentrated  in loans secured by
real estate in the Bank's market area and therefore  the Bank's  operations  are
affected  by  local  market  conditions.  The  results  of  operations  are also
influenced by the level of non-interest  expenses,  such as employees'  salaries
and benefits,  occupancy and equipment costs,  non-interest  income such as loan
related fees and fees on deposit related services,  and the Bank's provision for
loan losses.


COMPARISON OF FINANCIAL CONDITION
AT MARCH 31, 1999 AND DECEMBER 31, 1998

         Total assets  decreased by $14.3  million or 5.2% to $260.4  million at
March 31, 1999 from $274.7  million at December  31,  1998.  This  decrease  was
primarily due to the reduction in initial public offering  subscriptions payable
totaling  $17.8  million as the offering was completed on January 7, 1999 due to
acquisition of stock for stockholders and refunding of  oversubscriptions.  As a
result, federal funds sold decreased $27.7 million to $13.5 million at March 31,
1999 from $41.2 million at December 31, 1998. Available for sale mortgage-backed
securities  decreased by $12.6  million to $75.8  million at March 31, 1999 from
$88.4 million at December 31, 1998,  offset by an increase in available for sale
investment  securities  of $15.5 million to $32.4 million at March 31, 1999 from
$16.9  million  at  December  31,  1998,  as the Bank  security  purchases  were
concentrated  in tax exempt  securities  during the first  quarter  rather  than
mortgage-backed  securities.  Further,  investment  securities  purchases in the
near-term  will be  classified  as  available  for sale which will result in the
reduction in investment securities held to maturity.  Loans receivable increased
$7.5 million due to the Bank's ability to increase mortgage loan originations

                                       12

<PAGE>

resulting  from higher  levels of loan  refinancings  during a  continued  lower
interest rate environment.  In addition,  premises and equipment  increased $4.0
million  or  179.3% to $6.2  million  at March 31,  1999  from $2.2  million  at
December 31,  1998,  as the Bank  completed  the purchase of a building for $4.0
million,  to serve as an additional  branch  office and to house  administrative
operations.  Refurbishment  costs  for  this  purpose  are  estimated  to  be an
additional $2.2 million.

         The  Bank's  deposits,  decreased  by $10.0  million  or 4.9% to $195.5
million at March 31, 1999, as customers  withdrew  deposits to purchase stock in
the initial public  offering,  as well as pricing  strategies  designed to lower
cost of funds.  Borrowings  increased  $4.5 million or 13.8% to $37.0 million at
March  31,  1999  from  $32.6  million  at  December  31,  1998 as the Bank used
borrowings in conjunction with deposit pricing strategies to generate additional
income as part of its leveraging strategy. In addition,  initial public offering
subscriptions  payable  decreased  $17.8  million  due to the completion of  the
offering.

         Total equity  increased $9.0 million to $26.4 million at March 31, 1999
primarily due to the  completion of the initial  public  offering which provided
net  proceeds of $9.8  million in  addition  to net income of  $181,000  for the
quarter  ended  March 31,  1999,  offset by  $200,000  of  unrealized  losses on
securities  available  for  sale,  net of  taxes,  and  unearned  ESOP  stock of
$574,000.


COMPARISON OF OPERATING RESULTS FOR THE PERIODS
ENDED MARCH 31, 1999 AND MARCH 31, 1998

         Net Income.  Net income  decreased  $158,000 to $181,000 for the period
ended March 31, 1999 as  compared  to  $339,000  for the period  ended March 31,
1998.  Net  income  was lower  primarily  due to a  decrease  of  $16,000 in net
interest  income  as a result  of an  increase  in  total  interest  expense  of
$165,000,  slightly  offset by an increase in interest  income of  $149,000.  In
addition,  there was an  increase  in loan loss  provisions  of $33,000  for the
period ended March 31, 1999,  as compared to the same period for 1998.  Further,
non-interest  income declined  $28,000 to $37,000 for the period ended March 31,
1999 as  compared to $65,000  for the same  period in 1998,  while  non-interest
expense increased  $235,000,  to $1,136,000 from $901,000 for the same period to
period comparison.

         Net Interest  Income.  Net interest  income  before  provision for loan
losses decreased by approximately $16,000 or 1.2% to $1.3 million for the period

                                       13
<PAGE>


ended March 31, 1999. The decrease was primarily due to a decline in the average
yield on interest earning assets (on a tax equivalent  basis) of 44 basis points
from  7.12% for the period  ended  March 31,  1998 to 6.68% for the same  period
ended  1999,  offset by a decrease  of 20 basis  points in the  average  cost of
interest  bearing  liabilities to 4.82% from 5.02% for the same period to period
comparison.

         The Bank's  interest rate spread,  which is the difference  between the
yield on average  interest  earning  assets  less the cost of  interest  bearing
liabilities,  declined to 1.86% (on a tax equivalent basis) for the period ended
March 31,  1999,  from  2.10% for the  period  ended  March 31,  1998.  This was
primarily  attributed to higher  prepayments on mortgage  backed  securities and
loans  receivable  with the proceeds  reinvested in lower yielding assets due to
the general decline of market interest rates for these instruments. In addition,
competitive  pressure on the  pricing of loans and  deposits  has  resulted in a
smaller  interest  rate spread.  Competitive  pressure in the future may further
reduce the spread between asset yields and the cost of funds.

         Interest  Income.  Interest  income  increased  to $4.1 million for the
period  ended March 31,  1999,  from $3.9 million for the period ended March 31,
1998.  The  increase  was due to higher  average  balances in loans  receivable,
available for sale  securities and other interest  earning  assets,  offset by a
decrease in the average balance of securities held to maturity.  The decrease in
securities  held to maturity was due to higher  prepayments  of held to maturity
mortgage-backed  securities.  The increase in available for sale  securities was
due to  classification  of reinvested  funds as available for sale.  The average
yield on interest  earning  assets (on a tax  equivalent  basis)  decreased from
7.12% for the period ended March 31,  1998,  to 6.68% for the period ended March
31,  1999,  due  to  prepayment  of  higher  coupon  loans  and  mortgage-backed
securities with reinvestment of proceeds into lower coupon  instruments during a
low interest rate environment with a flat yield curve.

         Interest  on loans  receivable  increased  by $ 38,000 or 1.8 % for the
period  ended March 31, 1999 as compared to the same period of one year ago. The
increase  was due to a $3.7 million or 3.5%  increase in the average  balance of
loans  receivable  resulting  from  originations  of  new  loans  in  excess  of
prepayments  and  amortization,  offset by a decline in the average  yield of 13
basis  points  from 7.90% for the period  ended  March 31, 1998 to 7.77% for the
period ended March 31, 1999.  The decrease in the average yield was due to lower
interest   rates  on   originated   loans   during  the  1999   period  and  the
prepayment/amortization of higher rate loans.

         Interest expense.  Interest expense increased  $165,000 or 6.4% to $2.7
million for the period ended March 31, 1999, as compared to $2.5 million for the
same period last year.  The increase was due to a $22.6 million increase

                                       14
<PAGE>

in the average balance of interest  bearing  liabilities  partially  offset by a
decrease of 20 basis points in the average cost of interest bearing liabilities.
Interest expense on borrowed funds increased  $251,000 mainly due to an increase
in the average  balance of $20.1 million from $13.8 million for the period ended
March 31, 1998 compared to $33.9  million for the same period this year,  offset
by a decrease in the average cost of 58 basis points from 6.04% to 5.46% for the
same  periods.  Interest  expense on time deposits  decreased  $118,000 due to a
decline in the average  balances of time deposits of $2.0 million and a decrease
in the  average  cost of 25  basis  points.  Interest  expense  on DDA  accounts
increased  $12,000 due to an increase  in the average  balance of $2.6  million.
Interest  expense  on  savings  deposits  increased  $14,000  as a result  of an
increase in the average balances of $1.1 million to $28.9 million for the period
ended March 31, 1999 from $27.8  million  for the prior  period  ended March 31,
1998 as well as an increase of 7 basis  points in the average cost from 3.18% to
3.25% for the same periods.

         Provision  for loan losses.  The  provision  for loan losses  increased
$33,000,  thereby  increasing  the allowance for loan losses to $858,000 for the
period ended March 31, 1999. This increase in the allowance  reflects the Bank's
decision to provide  for loan losses  based on  management's  evaluation  of the
inherent risk in the Bank's loan portfolio,  as well as management's  evaluation
of the general  economic  conditions in the Bank's market area, in addition to a
comparison of loss experience at the Bank and loss experience and reserve levels
at peer  institutions.  In addition,  the allowance was increased as a result of
the changing  composition of the loan portfolio from single family  mortgages to
an increased emphasis on commercial real estate and consumer loans.

         Non-interest  income.  Non-interest  income  decreased  by  $28,000  to
$37,000 for the period ended March 31,  1999,  from $65,000 for the period ended
March  31,  1998.  This  was  primarily  due to  absence  of  gains  on sales of
securities and loans which totaled $29,000 for the period ended March 31, 1998.

         Non-interest  expenses.  Non-interest expenses increased by $235,000 to
$1.1  million for the period  ended March 31,  1999 from  $901,000  for the same
period ended 1998.  The increase was  primarily  due to increases of $115,000 in
salaries and benefits resulting from an increase in staff,  increases in medical
insurance  rates,  recognition  of  expenses  for new  benefit  plans for senior
executives  and the  Board of  Directors,  as well as  normal  salary  and merit
increases.   Occupancy  and  equipment   expenses   increased   $61,000   mostly
attributable to increases in computer service expense of $36,000  resulting from
an increase  in account  volumes and  including  $5,000 in year 2000  compliance
costs.  Other  non-interest  expense  increased  by $62,000 to $155,000  for the
period ended March 31,  1999,  from $93,000 for the period ended March 31, 1998.
This  increase  was due to a  $31,500  increase  in professional

                                       15

<PAGE>

fees resulting from the  reorganization.  In addition,  appraisal and other loan
underwriting  expenses  increased $15,000 due to an increase in loan origination
volume,  and seminar  expenses were $9,000 higher due to costs  associated  with
staff training and education.

         Income  Taxes.   Income  taxes  decreased  by  approximately   $154,000
primarily due to an increase in levels of tax exempt securities.

Liquidity and Capital Resources

         The Bank's  primary  sources of funds are deposits,  wholesale  funding
from the Federal Home Loan Bank,  principal and interest  payments on loans, and
securities,  and to a lesser  extent,  proceeds  from  the sale of loans  and/or
securities.  While maturities and scheduled amortization of loans and securities
provide an indication of the timing of the receipt of funds, changes in interest
rates,   economic  conditions,   and  competition  strongly  influence  mortgage
prepayment rates and deposit flows, reducing the predictability of the timing of
sources of funds.

         The primary  investing  activities of the Bank are the  origination  of
one-to-four-family  residential and, to a lesser extent,  commercial real estate
and  multi-family  mortgage  loans,  and the  purchase  of  mortgage-backed  and
mortgage-related  and debt  securities.  During the three months ended March 31,
1999 and March 31, 1998, the Bank's  disbursements for loan originations totaled
$14.4  million and $4.5  million,  respectively.  Purchases of  mortgage-backed,
mortgage-related  and debt securities  totaled $15.8 million,  and $21.6 million
for the three months ended March 31, 1999 and March 31, 1998,  respectively.  In
addition,  the Bank purchases of premises and equipment totaled $4.0 million for
the three months ended March 31, 1999  compared to $6,000 for the same period in
1998, as the Bank completed the purchase of a building to serve as an additional
branch office and to house  administrative  operations.  These  activities  were
funded   primarily   by  principal   repayments   and   prepayments   on  loans,
mortgage-backed and mortgage- related securities,  debt securities,  borrowings,
and proceeds from the initial public offering. Proceeds from principal collected
on  mortgage-backed  securities totaled $12.9 million for the three months ended
March 31, 1999 as compared  to $3.4  million for the same three  months in 1998.
The Bank  experienced a net decrease in total  deposits of $10.0 million for the
three  months  ended March 31, 1999  compared to an increase of $4.0 million for
the three months ended March 31, 1998.  Deposit  flows are affected by the level
of market interest rates, as well as the interest rates and products  offered by
local competitors and the Bank and other factors.

                                       16
<PAGE>

         The Bank  closely  monitors  its  liquidity  position on a daily basis.
Excess  short-term  liquidity is invested in overnight  federal funds sold. On a
longer term basis, the Bank invests in various lending products, mortgage-backed
and mortgage-related and investment  securities.  The Bank may borrow funds from
the Federal Home Loan Bank subject to certain limitations. Based on the level of
qualifying collateral available to secure advances at March 31, 1999, the Bank's
borrowing limit from the Federal Home Loan Bank was approximately $76.8 million,
with unused  borrowing  capacity of $39.8 million at that date. Other sources of
liquidity include borrowings under repurchase  agreements and sales of available
for sale securities.

         The Bank's  most  liquid  assets are cash and cash  equivalents,  which
include interest-bearing deposits and short-term highly liquid investments (such
as federal funds sold) with  original  maturities of less than three months that
are readily  convertible  to known amounts of cash. The level of these assets is
dependent on the Bank's operating, financing and investing activities during any
given period.  At March 31, 1999 and March 31, 1998,  cash and cash  equivalents
totaled $15.9 million and $18.4  million,  respectively,  which amounted to 6.1%
and 7.9% of total assets at those dates.

         Loan commitments totaled $14.3 million at March 31, 1999,  comprised of
$6.1 million in one- to four-family loan  commitments,  $16,000 in construction
loan commitments,  $7.9 million in home equity loan commitments, and $302,000 in
checking line of credit loan  commitments.  Management  of the Bank  anticipates
that  it  will  have  sufficient  funds  available  to  meet  its  current  loan
commitments.

         Certificates  of deposit which are scheduled to mature in less than one
year from March 31, 1999 totaled $114.4 million.  Based upon past experience and
the Bank's  current  pricing  strategy,  management  believes that a significant
portion of such deposits will remain with the Bank.

         At March 31,  1999,  the Bank  exceeded all of its  regulatory  capital
requirements  with a  leverage  capital  level  of  $22.5  million,  or 8.75% of
adjusted assets,  which is above the required level of $10.3 million, or 4.0% of
adjusted  assets and total  risk-based  capital of $23.4  million,  or 23.08% of
adjusted assets, which is above the required level of $8.1 million, or 8.0%.

         The liquidity of a banking institution  reflects its ability to provide
funds to meet loan requests,  to accommodate possible outflows in deposits,  and
to take  advantage  of  interest  rate  market  opportunities.  Funding  of loan
requests,  providing for  liability  outflows,  and  management of interest rate
fluctuations  require  continuous  analysis in order to match the  maturities of
specific  categories of short term loans and investments  with specific types of
deposits and borrowings.  Savings bank liquidity is normally considered in terms
of the nature and mix of the banking institution's sources and uses of funds.

                                       17
<PAGE>

         Management  is not aware of any trends,  events or  uncertainties  that
will have or are  reasonably  likely  to have a  material  effect on the  Bank's
liquidity,  capital  or  operations  nor is  management  aware  of  any  current
recommendation by regulatory authorities,  which if implemented, would have such
an effect.

Year 2000 Evaluation

         Rapid  and  accurate  data   processing  is  essential  to  the  Bank's
operations.  Many  computer  programs  that can only  distinguish  the final two
digits of the year  entered (a common  programming  practice in prior years) are
expected  to read  entries  for the year  2000 as the  year  1900 or as zero and
incorrectly  attempt to compute payment,  interest,  delinquency and other data.
The Bank has been evaluating both information  technology (computer systems) and
non-information technology systems (e.g., vault timers, electronic door lock and
heating,  ventilation and air conditioning controls).  The Bank has examined all
of its non-information technology systems and has either received certifications
of year 2000  compliance  for systems  controlled  by third party  providers  or
determined  that the systems  should not be impacted by the year 2000.  The Bank
expects  to further  test the  systems  it  controls  and  receive  third  party
certification,  where appropriate, that they will continue to function. The Bank
does not expect any  material  costs to address its  non-information  technology
systems and has not had any material costs to date. The Bank has determined that
the information  technology  systems it uses have  substantially  more year 2000
risk than the non-information technology systems it uses. The Bank has evaluated
its information  technology  systems risk in three areas: (1) our own computers,
(2) computers of others used by our  borrowers,  and (3) computers of others who
provide us with data processing.

         Our own computers.  We expect to spend  approximately  $200,000 through
December 31, 1999 to upgrade our computer  system.  We expect to capitalize this
cost. This upgrade is expected to eliminate the year 2000 risk in our computers.
We have not had any material costs to address this risk since December 31, 1998
and we do not  expect to have  material  costs to  address  this risk area after
March 31, 1999. At March 31, 1999, all of the estimated  $200,000 had been
capitalized.  In addition to this $200,000, we expensed approximately $5,000
during the quarter ended March 31, 1999 in year 2000 compliance costs.

         Computers of others used by our  borrowers.  We have  evaluated most of
our  borrowers  and do not  believe  that the year 2000  problem  should,  on an
aggregate  basis,  impact their ability to make payments to the Bank. We believe
that most of our residential borrowers are not dependent on their home computers
for income and that none of our  commercial  borrowers  are so large that a year
2000 problem  would render them unable to collect  revenue or rent and, in turn,
continue to make loan payments to the Bank.  As a result,  we have not contacted
residential  borrowers  concerning  this issue and do not consider this issue in
our  residential  loan  underwriting   process.  We  have  been  contacting  our
commercial borrowers with loans of $250,000 or more and we have been considering
this issue during  commercial loan  underwriting.  At March 31, 1999 these loans
constituted $7.7 million or 86.5% of our $8.9 million commercial loan portfolio.
We do not expect any material costs to address this risk area.

                                       18

<PAGE>


         Computers  of  others  who  provide  us with data  processing.  Between
November 1998 and February  1999,  the Bank performed year 2000 testing with its
primary third party service  provider.  Testing  consisted of placing the Bank's
computer  system in a year  2000  environment  and  conducting  typical  banking
transactions using critical 21st century dates, e.g., December 31, 1999, January
1, 2000,  January 3, 2000,  February 29, 2000,  and March 1, 2000 (the year is a
leap  year).  Interface  testing  between  the  Bank and the  Federal  Reserve's
"Fedline"  system also took place in the fourth  quarter of 1998.  These testing
programs  were fully  successful,  and the Bank  management  has every reason to
believe that core data  processing  systems will  function  properly in the year
2000. However,  delays,  mistakes or failures could have a significant impact on
our financial condition and results of operations.

         Contingency  Plan.  The Bank has  developed a  comprehensive  year 2000
contingency program in accordance with FFIEC  guidelines.  While Bank management
fully expects to be operational in a year 2000 environment, the contingency plan
will guide Bank  operations  in the event that one or more core  systems are not
functioning.

                                       19
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

                  Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

                  Not applicable.

Item 3.  Defaults Upon Senior Securities

                  Not applicable.

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

         On  January  25,  1999,  the  Registrant  held its  annual  meeting  of
stockholders (the "Meeting"). At the Meeting, the sole stockholder of record, as
of the January 4, 1999  voting  record  date,  elected  all nine  directors  and
ratified the appointment of KPMG LLP as independent  auditor for the fiscal year
ending December 31, 1999 by a vote of 10,000 shares in favor and no shares voted
against,  abstain or  withheld.  The  re-elected  directors  are Susan E. Naruk,
Nelson Fiordalisi,  Michael W. Azzara, Jerome Goodman, Bernard J. Hoogland, John
Kandravy, Robert S. Monteith, John J. Repetto and Paul W. Thornwall.

Item 5.  Other Information

                  Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      None.

         (b)      No  reports on Form 8-K were filed  during the  quarter  ended
                  March 31, 1999.


                                       20
<PAGE>

                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                   RIDGEWOOD FINANCIAL, INC.



Date: May 12, 1999                 By:  /s/ Susan E. Naruk 
                                        ----------------------------------------
                                        Susan E. Naruk
                                        President and Chief Executive Officer
                                        (Principal Executive Officer)
                                        (Duly Authorized Officer)



Date: May 12, 1999                 By:  /s/ John Scognamiglio
                                        ----------------------------------------
                                        John Scognamiglio
                                        Senior Vice President and
                                        Chief Financial Officer
                                        (Principal Financial Officer and Chief
                                        Accounting Officer)