U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-QSB

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

                For the quarter period ended December 31, 1996

                                      OR

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


               For the transition period from ______________ to _______________


                          Commission File No. 0-28200


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

            New Jersey                                  22-3413572
    -------------------------------                 -------------------
    (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                 Identification No.)

                  700-88 Broadway, Westwood, New Jersey 07675
                  -------------------------------------------
                   (Address of principal executive offices)

                                 201-666-5002
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

Check whether the issuer (1) filed all reports  required to be filed by Sections
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
                                                                  -----     ----

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

                Class: Common Stock, par value $0.10 per share
               Outstanding shares at December 31, 1996:  646,672



<PAGE>



                        WESTWOOD FINANCIAL CORPORATION

                             INDEX TO FORM 10-QSB

                                                                          Page
                                                                          ----
PART 1.   FINANCIAL INFORMATION
          ---------------------

Item 1.   Financial Statements

          Consolidated  statements  of Financial  Condition at December 
          31, 1996 (unaudited) and March 31, 1996 (audited)                  2

          Consolidated  Statements of Income for the three and nine months 
          ended December 31, 1996 and 1995 (unaudited)                       3

          Consolidated  Statements  of Cash Flows for the three and nine  
          months ended December 31, 1996 and 1995 (unaudited)                4

          Notes to Consolidated Financial Statements (unaudited)         5 & 6

Item 2.   Management's  Discussion  and  Analysis  of  Financial 
          Condition and Results of Operations                                7


PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                 12

Item 2.   Changes in Securities                                             12

Item 3.   Default Upon Senior Securities                                    12

Item 4.   Submission of Matters to a Vote of Security Holders               12

Item 5.   Other Information                                                 12

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

SIGNATURES







<PAGE>



                 WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                            (Dollars in Thousands)

<TABLE>
<CAPTION>


                                                       WESTWOOD FINANCIAL      WESTWOOD
                                                          CORPORATION          SAVINGS
                                                          CONSOLIDATED          BANK(1)
                                                        DECEMBER 31, 1996   MARCH 31, 1996
                                                       ------------------   --------------
                                                                      (UNAUDITED)
                  ASSETS
                  ------
<S>                                                         <C>               <C>      
Cash and cash equivalents                                   $   3,345         $   5,208
Loans receivable, net                                          40,181            34,497
Interest receivable on loans                                      253               218
FHLB stock, at cost                                               500               440
Mortgage-backed securities held-to-maturity,
  (market value of $19,673 and $13,266, respectively)          19,577            13,281
Investment securities held-to-maturity,
  (market value of $37,286 and $25,586, respectively)          37,655            25,742
Investment securities available-for-sale,
  (at market value)                                               936             4,422
Interest receivable on investments                                671               488
Property and equipment, net                                       748               750
Goodwill                                                        1,155             1,238
Prepaid expenses and other assets                                  74               280
                                                            ---------         ---------

       TOTAL ASSETS                                         $ 105,095         $  86,564
                                                            =========         =========

               LIABILITIES AND SHAREHOLDERS' EQUITY
               ------------------------------------
Liabilities:
  Demand deposits                                           $  13,451         $  12,618
  Savings deposits                                             71,664            67,622
  Interest payable on deposits                                    142               116
  Federal Home Loan Bank advances                              10,000                 0
  Other liabilities                                                66                81
  Dividends payable                                                32                 0
                                                            ---------         ---------

       Total Liabilities                                       95,355            80,437
                                                            ---------         ---------

Commitments and Contingencies                                      --                --

Shareholders' equity:
  Common stock                                                     65               760
  Paid in capital                                               3,264             4,414
  Retained earnings                                             6,585             1,174
  Unearned stock bonus plan shares                                (92)             (128)
  Unrealized gain/(loss) on securities available-for-sale         (82)              (93)
       Total Shareholders' Equity                               9,740             6,127
                                                            ---------         ---------

       TOTAL LIABILITIES AND
         SHAREHOLDERS' EQUITY                               $ 105,095         $  86,564
                                                            =========         =========
</TABLE>


(1)    On June 6, 1996,  Westwood Savings Bank became a wholly-owned  subsidiary
       of Westwood  Financial  Corporation.  The  consolidated  balance sheet at
       March 31,  1996 has been taken  from the  audited  balance  sheet at that
       date.

See notes to consolidated financial statements.

                                      2

<PAGE>



                       WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
                        UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
                                  (Dollars in Thousands)
<TABLE>
<CAPTION>
                                              FOR THE THREE MONTHS     FOR THE NINE MONTHS
                                                ENDED DECEMBER 31,      ENDED DECEMBER 31,
                                          -------------------------- -------------------------
                                              1996          1995        1996          1995
                                          -------------  ----------  ----------    -----------

                                            WESTWOOD                  WESTWOOD
                                            FINANCIAL     WESTWOOD    FINANCIAL      WESTWOOD
                                           CORPORATION     SAVINGS   CORPORATION     SAVINGS
                                           CONSOLIDATED     BANK     CONSOLIDATED      BANK
                                                                                     
                                                                                     
                                                                                     
INTEREST INCOME                                                                      
<S>                                           <C>          <C>        <C>       <C>        
Loans receivable                              $    773     $  648     $  2,213  $     1,946
Mortgage-backed securities                         352        212          801          639
Investment securities, including O/N deposits      614        545        1,772        1,509
Dividends on FHLB stock                              8          7           22           24
                                              ========     ======     ========       ======
Total interest and dividend income               1,747      1,412        4,808        4,118
                                                                                     
INTEREST EXPENSE                                                                     
Deposits                                           922        856        2,638        2,456
Borrowings                                          66          0           66            0
                                              --------     ------     --------       ------
Total interest expense                             988        856        2,704        2,456
                                              ========     ======     ========       ======
                                                                                     
Net interest income                                759        556        2,104        1,662
                                                                                     
Provision for loan losses                            4          4           44           31
                                              --------     ------     --------       ------
                                                                                     
Net interest income after                                                            
provision for loan losses                          755        552        2,060        1,631
                                                                                     
NONINTEREST INCOME                                                                   
Miscellaneous charges and fees                      37         24           99           74
Late charges                                         2          1            5            5
                                              --------     ------     --------       ------
                                                                                     
Total noninterest income                            39         25          104           79
                                                                                     
NONINTEREST EXPENSE                                                                  
Compensation and employee benefits                 174        158          504          465
FDIC insurance and regulatory expenses              54         42          154          120
SAIF Special Assessment                              0          0          454            0
Depreciation and amortization                       34         39          115          115
Data Processing                                     40         30          109           87
Occupancy                                           36         28           93           85
Loss on sale of securities                           0          0           17            0
Other                                              113         75          325          221
                                              --------     ------     --------       ------
                                                                                     
Total noninterest expense                          451        372        1,771        1,093
                                              --------     ------     --------       ------
                                                                                     
INCOME (LOSS) BEFORE INCOME TAXES                  343        205          393          617
                                                                                     
INCOME TAX EXPENSE                                 128         70          159          220
                                              --------     ------     --------       ------
                                                                                     
NET INCOME (LOSS)                             $    215     $  135     $    234  $       397
                                              ========     ======     ========       ======
                                                                                     
Weighted Average Earnings Per Share           $   0.33     $   NM     $   0.40  $        NM
                                              ========     ======     ========       ======
                                                                                     
Weighted Average Shares Outstanding            646,672         NM      581,701           NM

</TABLE>

     NM - Not meaningful due to conversion and reorganization  effective June 6,
1996.

See notes to consolidated financial statements.

                                            3

<PAGE>



                       WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
                      UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                       WESTWOOD FINANCIAL                WESTWOOD
                                                         CORPORATION                      SAVINGS
                                                         CONSOLIDATED                       BANK
                                                       THREE MONTHS ENDED             NINE MONTHS ENDED
                                                          December 31,                   December 31,
                                                       ------------------             ------------------
                                                        1996        1995               1996        1995
                                                       ------      ------             ------      -------

INTEREST OPERATING ACTIVITIES
<S>                                                    <C>         <C>              <C>           <C>     
  NET INCOME                                           $    215    $    135         $     234     $    397
                                                       ========    ========         =========     ========
  ADJUSTMENTS TO RECONCILE NET INCOME TO
    NET CASH PROVIDED BY OPERATING ACTIVITIES:
    Depreciation                                             17          15                51           44
    Amortization of good will                                24          24                71           71
    Amortization of stock bonus plan                         12          12                36    
    Provision for loan losses                                 4           4                44           31
    Loss on sale of securities                               --          --                17           --
  (INCREASE) DECREASE IN ASSETS:
    Interest receivable                                     (96)        (18)             (218)        (106)
    Prepaid income taxes                                     63          20               (18)          31
    Prepaid expenses                                         60         (52)              247          (67)
  INCREASE (DECREASE) IN LIABILITIES:
    Interest payable                                         25          30                26           55
    Accrued expenses                                       (462)         (2)              (15)         (50)
    Taxes payable                                            --          49               (23)          60
                                                       --------    --------         ----------    --------

          TOTAL ADJUSTMENTS                                 353         (82)               218         105
                                                       --------    --------         ----------    --------
          NET CASH (USED BY) PROVIDED BY
          OPERATING ACTIVITIES                             (138)        217                452         502
                                                       --------    --------         ----------    --------

INVESTING ACTIVITIES:
    Loans made of net repayments                         (1,699)       (382)            (5,728)       (905)
    Purchase of investments - net of sales              (11,549)     (1,435)           (14,789)     (5,733)
    Reduction of goodwill                                    --          --                 12          --
    Purchases of office property and equipment               (7)        (31)               (49)        (54)
                                                       --------    --------         ----------    --------
          NET CASH USED BY INVESTING ACTIVITIES         (13,255)     (1,848)           (20,554)     (6,692)
                                                       --------    --------         ----------    --------

FINANCING ACTIVITIES:
    Net increase in deposit accounts                      1,690       2,596              4,875       8,790
    Proceeds from sale of stock and reorganization,
       net of conversion costs                               --          --              3,428          --
    Dividends paid                                          (32)        (16)               (64)        (48)
    Loan proceeds received                               10,000          --             10,000          --
                                                       --------    --------         ----------    --------
     NET CASH PROVIDED BY FINANCING ACTIVITIES           11,658       2,580             18,239        8,742
                                                       --------    --------         ----------    --------

     INCREASE (DECREASE) IN CASH
       AND CASH EQUIVALENTS                              (1,735)        949             (1,863)      2,552

     CASH AND CASH EQUIVALENTS - Beginning of period      5,080       6,658              5,208       5,055
                                                       --------    --------         ----------    --------

     CASH AND CASH EQUIVALENTS - End of period         $  3,345   $   7,607         $    3,345    $  7,607
                                                       ========   =========         ==========    ========

CASH PAID DURING THE PERIOD FOR:
   Interest on deposits                                $    963    $    826         $    2,678    $  2,401
   Income taxes                                        $     65    $      0         $      200    $    128

</TABLE>


See notes to consolidated financial statements 

                                        4

<PAGE>



                                        2
          Notes to Unaudited Interim Consolidated Financial Statements

                                December 31, 1996


NOTE 1:  BASIS OF PRESENTATION

The accompanying  unaudited interim consolidated  financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

The  accompanying  consolidated  financial  statements  include the  accounts of
Westwood Financial  Corporation (the "Corporation") and Westwood Savings Bank, a
wholly-owned  subsidiary  of  the  Corporation.   All  significant  intercompany
balances and transactions have been eliminated in consolidation.

The Corporation is a New Jersey stock corporation  organized in December 1995 to
facilitate the conversion of the Bank's holding company  (formerly  Bergen North
Financial, M.H.C.) from the mutual to stock form of ownership and to acquire and
hold all of the capital stock of the Bank. In  connection  with the  conversion,
Bergen North Financial,  M.H.C., which had owned 58% of the Bank's common stock,
was merged with and into the Bank, and its shares of the Bank were canceled.  On
June 6, 1996, the Corporation  issued 261,488 shares of its common stock for all
of the  remaining  outstanding  shares of the Bank,  and issued and sold 385,255
shares of its common stock at a price of $10.00 per share. At December 31, 1996,
the Corporation had 646,672 shares of Common Stock issued and outstanding. Since
June 6, 1996, the Corporation engaged in no significant  business activity other
than its ownership of the Bank's common stock.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary for fair presentations have been included.  The
results of  operations  for the  interim  periods  ended  December  31, 1995 and
December 31, 1996 are not  necessarily  indicative  of the results  which may be
expected for an entire year or any other period. For further information,  refer
to the consolidated  financial  statements and footnotes thereto included in the
Corporation's  Special  Report on Form  10-KSB for the year ended March 31, 1996
filed pursuant to Rule 15d-2.

NOTE 2:  EARNINGS PER SHARE

Earnings  per share for the three and nine months  ended  December  31, 1996 was
calculated  based on the number of fully  diluted  shares at period  end.  Stock
options are regarded as common  stock  equivalents  computed  using the Treasury
Stock method.

Earnings  per  share  for the  three  months  ended  December  31,  1995 was not
meaningful due to the conversion and reorganization effective June 6, 1996.


                                      5

<PAGE>




NOTE 3:  SAIF SPECIAL ASSESSMENT

The FDIC has imposed a special assessment on the Savings  Association  Insurance
Fund members based on the Bank's deposits as of March 31, 1995. The Bank paid an
assessment of $454,000 on November 27, 1996 which was required to be accrued and
expensed for the quarter ended September 30, 1996.

NOTE 4:  INCOME TAXES

The  Small  Business  Job  Protection  Act  of  1996  (1996  Act)  repealed  the
"percentage  of income  method" for  accounting for the provision for bad debts.
The Bank  has  used  this  method  consistently  in  developing  their  bad debt
provision and reserve for income tax purposes  through March 31, 1996.  The 1996
Act requires the Bank to recapture  any addition to this reserve  subsequent  to
1987. As a result,  the Bank has a deferred tax liability of $145,000 which will
be expensed in six annual installments beginning in tax year 1999.


                                      6

<PAGE>



                       MANAGEMENT DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Comparison of Financial Condition at December 31 and March 31, 1996
-------------------------------------------------------------------


Total assets at December  31, 1996  amounted to $105.0  million,  an increase of
$18.5  million,  or 21.41% over total assets of March 31, 1996.  The increase in
assets includes a $5.7 million,  or 16.48%,  increase in loans receivable due to
increased  loan  originations,  and a $18.2  million,  or  46.66%,  increase  in
investment  securities  which  includes a $10.0 million  investment as part of a
leverage  strategy,  offset by the sale of $3.5 million of securities  available
for sale. In November  1996, the Company  purchased a $10.0 million U.S.  Agency
security  with a term of ten years and a two year call.  The purchase was funded
with a two year advance from the Federal Home Loan Bank  ("FHLB") of New York to
take advantage of the positive spread of 1.20%.  The increase in assets was also
due to the receipt of $3.6 million in net proceeds  received in connection  with
the  mutual-to-stock  conversion  of  the  Bank's  mutual  holding  company  and
simultaneous Stock Offering completed in June 1996 ("Stock Offering").

Total  liabilities  and  shareholders'  equity  amounted  to $105.0  million  at
December  31,  1996,  an  increase  of $18.5  million,  or  21.41%,  over  total
liabilities  and  shareholders'  equity  at March  31,  1996.  The  increase  in
liabilities was due primarily to a $4.9 million net increase in deposits and the
$10.0 million FHLB advance referred to above as an investment strategy.  The net
increase in  shareholder's  equity of $3.6 million is the result of the proceeds
of the Stock Offering,  as well as $234,000 net income for the nine months ended
December 31, 1996. See also "Item 5. Other Information."

The Bank had no non-performing loans at December 31, 1996 or at March 31, 1996.




                                      7

<PAGE>



Comparison  of Operating  Results For the Three Months Ended  September 30, 1996
--------------------------------------------------------------------------------
and 1995
--------

General.  Net income for the three  month  period  ended  December  31, 1996 was
$215,000  compared to a net income of $135,000  for the three month period ended
December 31, 1995. This increase was due primarily to increased  interest income
offset somewhat by interest and non-interest expenses.

Interest  Income.  Interest  income  increased  $335,000,  or 23.73%,  from $1.4
million for the three month period  ended  December 31, 1995 to $1.7 million for
the three months ended  December 31, 1996.  Interest  income from mortgage loans
increased  $125,000 due to increased lending.  Interest on security  investments
and  mortgaged-backed  securities  increased  $209,000 due to increased  average
balances of such  investments  funded by increased  deposits as well as proceeds
from the Stock  Offering  and the $10.0  million  investment  from the  leverage
strategy.

Interest  Expense.  Total interest expense increased from $856,000 for the three
month  period  ended  December  31, 1995 to $988,000  for the three month period
ended  December 31, 1996.  This increase was due primarily to an increase in the
average  balance of deposits  from $78.6  million  during the three months ended
December 31, 1995 to $85.1  million  during the three months ended  December 31,
1996 and $66,000  during the three  months ended  interest  expense on the $10.0
million FHLB advance.

Net Interest Income. Net interest income increased $203,000,  or 36.51%, for the
three  months  ended  December  31, 1996 as  compared  to the same period  ended
December  31,  1995.  This  was  primarily  due to  increased  revenue  from the
additional  interest-earning assets acquired through the investment of the Stock
Offering  proceeds,  the $10.0 million investment from the leverage strategy and
the increase in deposits. In addition, net interest margin (net yield) increased
from 2.75% for the quarter ended December 31, 1995 to 3.22% for the similar 1996
period.

Provision  for Loan Losses.  Provisions  for the loan losses  remained the same,
$4,000,  for the  periods  ended  December  31,  1995  and  December  31,  1996.
Delinquencies   remained  relatively  stable  during  these  periods.  The  Bank
maintains  a  provision  for losses on loans  based upon  management's  periodic
evaluation of known and inherent  risks in the loan  portfolio,  the Bank's past
loss experience,  adverse  situations that may affect the borrower's  ability to
repay  loans,  estimated  value of the  underlying  collateral  and  current and
expected market conditions.

Non-Interest  Income.  Non-interest income increased $14,000, or 56.00%,  during
the period  ended  December  31,  1996,  as compared  to the same  period  ended
December 31, 1995.  This increase was primarily due to increased fee income from
additional checking accounts and ATM fees.

Non-Interest  Expense.  Non-interest expense increased $79,000 from $372,000 for
the three months ended  December 31, 1995 to $451,000 for the three months ended
December 31, 1996.  Operating costs incurred as a public company including legal
and consulting fees and auditing  expenses  increased $14,000 during the period.
The  increase  was  also due to  additional  costs  of an  added  ATM  facility,
increases in data processing fees, increased loan processing costs due to higher
loan volume,  additional  compensation due to increased staff and increased FDIC
premiums due to higher deposit balances.

Income Tax Expense.  Income tax expenses  increased $58,000 from $70,000 for the
three month  period  ended  December  31,  1995 to $128,000  for the three month
period ended December 31, 1996 due to increased earnings.


                                      8

<PAGE>



Results of  Operations - Comparison  of Nine Months Ended  December 31, 1996 and
--------------------------------------------------------------------------------
December 31, 1995
-----------------

General.  Net income for the nine  month  period  ended  December  31,  1996 was
$234,000 compared to $397,000 for the nine month period ended December 31, 1995.
This  decrease  reflects a $291,000 net charge for a special  assessment  by the
FDIC  for the  SAIF.  A loss  of  $17,000  on the  sale of a  mutual  fund  also
contributed  to the decrease in net income.  The mutual fund sale  proceeds were
reinvested in higher yielding adjustable mortgage-backed securities.

Interest  Income.  Total interest income  increased to $4.8 million for the nine
months  ended  December  31, 1996 from $4.1  million  for the nine months  ended
December 31, 1995. This increase of $700,000, or 16.76%, was due primarily to an
increase of $267,000 in interest  earned on loans  receivable  due to  increased
lending, and and increase of $423,000 in interest earned on security investments
and  mortgage-backed  securities  due to higher  yields  and  increased  average
balances of such  investments  funded by increased  deposits,  receipts from the
Stock Offering, as well as, the $10.0 million investment mentioned previously.

Interest  Expense.  Total interest  expense  increased from $2.5 million for the
nine months ended  September  30, 1995 to $2.7 million for the nine months ended
December 31, 1996. This increase was due primarily to an increase in the average
balance of deposits from $78.6 million during the nine months  December 31, 1995
to $85.1 million during the nine months ended December 31, 1996.

Net Interest Income. Net interest income increased $442,000,  or 26.59%, for the
nine months  ended  December  31,  1996 as  compared  to the same  period  ended
December 31, 1995. This was due to the increased revenue from interest earned on
the additional  interest  earning assets acquired  through the investment of the
proceeds of the Stock  Offering,  the increase in deposits and the $10.0 million
investment.

Provision  for Loan Losses.  The  provision for losses on loans was increased to
$44,000 for the nine months ended December 31, 1996, compared to $31,000 for the
nine months ended  December 31, 1995, due to  management's  decision to increase
the provision due to the increased volume of loan activity.
Delinquencies remained relatively stable during these periods.

Non-Interest Income.  Non-interest income increased $25,000 from $79,000 for the
nine  months  ended  December  31, 1995 to  $104,000  for the nine months  ended
December  31,  1996,  primarily  due to ATM fees and an increase in personal and
business checking accounts which resulted in increased fee income.

Non-Interest Expense.  Non-interest expense increased $700,000 from $1.1 to $1.8
million  during  the  comparable  periods  ending  December  31,  1995 and 1996,
respectively.  This  increase was  primarily  due to the  one-time  SAIF special
assessment of $454,000 (before taxes).  Non-interest  expense also increased due
to a $17,000 loss on the sale of a mutual fund.  Increased loan processing costs
attributed to higher loan volume and additional  compensation  due to additional
staff.  The  Corporation  also  experienced  additional  costs from an added ATM
facility  and  increased   advertising   and   promotional   activities.   Other
non-interest  expenses,   including  legal,  consulting,  stock  registrar,  and
auditing expenses,  increased $45,000,  due to the added costs of being a public
company.

Income Tax Expense.  Income tax expense  decreased $61,000 from $220,000 for the
nine month period ended  December 31, 1995 to $159,000 for the nine month period
ended December 31, 1996 due to decreased earnings.


                                      9

<PAGE>



Liquidity Resources
-------------------

The Bank's  liquidity is a measure of its ability to fund loans, pay withdrawals
of deposits, and other cash outflows in an efficient, cost effective manner. The
Bank's  primary  sources of funds are deposits and  scheduled  amortization  and
prepayment  of loans and  mortgage-backed  securities.  During the past  several
years,  the Bank has used such funds  primarily to fund maturing time  deposits,
pay savings withdrawals, fund lending commitments, purchase new investments, and
increase  liquidity.   The  Bank  is  currently  able  to  fund  its  operations
internally.  Additionally,  sources  of funds  include  the  ability  to utilize
Federal Home Loan Bank of New York  advances  and the ability to borrow  against
mortgage-backed and investment securities. As of December 31, 1996, the Bank had
$10.0  million  in  borrowed  funds  from  the  FHLB.  Loan  payments,  maturing
investments and mortgage-backed  security  prepayments are greatly influenced by
general interest rates, economic conditions and competition.

The Bank  anticipates  that it will have sufficient  funds available to meet its
current commitments.  As of December 31, 1996, the Bank had mortgage commitments
to fund loans of $900,000. Also, at December 31, 1996, there were commitments on
unused  lines  of  credit  relating  to  home  equity  loans  of  $1.8  million.
Certificates of deposit  scheduled to mature in one year or less at December 31,
1996  totaled  $47.9  million.  Based  on  historical  deposit  withdrawals  and
outflows,  and on internal  monthly  deposit  reports  monitored by  management,
management  believes that a majority of such deposits will remain with the Bank.
As a result, no adverse liquidity effects are expected.

At December 31, 1996, the Bank's total liquidity was 69.81%.

Capital Compliance
------------------

The following table sets forth the  institution's  capital  position at December
31, 1996 as compared to the minimum regulatory capital  requirements  imposed on
the  institution  by the  FDIC at that  date.  The  Bank  also  met the  capital
requirements of the New Jersey Department of Banking.

                                                     At December 31, 1996
                                                  Amount         % of Assets

GAAP Capital:                                     $  9,740           9.27%
                                                  ========           ==== 

Leverage Capital:(1)(2)
Actual Leverage Capital                           $  6,851            6.96%
Leverage Capital Requirement                         2,954            3.00%
                                                  --------            ---- 
  Excess                                          $  3,897            3.96%
                                                  ========            ==== 
Tier 1 Capital: (1)(3)
  Actual Tier 1 Capital                           $  6,851           17.04%
  Tier 1 Capital Requirement                         1,608            4.00%
                                                  --------            ---- 
  Excess                                          $  5,243           13.04%
                                                  ========           ===== 

Total Risk-Based Capital:(1)(3)
  Actual Risk-Based Capital                       $  7,065           17.57%
  Risk-Based Capital Requirement                     3,216            8.00%
                                                  --------            ---- 
  Excess                                          $  3,849            9.57%
                                                  ========            ==== 

(1)  Regulatory  capital  reflects   modifications  from  GAAP  capital  due  to
     identifiable  intangible  assets and  constraints on allowance for loan and
     lease losses.
(2)  Leverage  Capital is computed as a  percentage  of Average  Total Assets of
     $98,450.
(3)  Tier 1 Capital and Total Risk-Based Capital are computed as a percentage of
     Total Risk-Weighted Assets of $40,201.

                                      10

<PAGE>




Impact of Inflation and Changing Prices
---------------------------------------

   The consolidated  financial  statements of the Corporation and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance with GAAP, which
require the measurement of financial  position and operating results in terms of
historical  dollars without  considering  the change in the relative  purchasing
power of money over time due to inflation.  The impact of inflation is reflected
in the increased cost of the  Corporation's  operations.  Unlike most industrial
companies,  nearly all of the  assets and  liabilities  of the  Corporation  are
financial.   As  a  result,   interest  rates  have  a  greater  impact  on  the
Corporation's  performance  than do the effects of general  levels of inflation.
Interest  rates do not  necessarily  move in the same  direction  or to the same
extent as the prices of goods and services.


Key Operating Ratios
--------------------

THE TABLE BELOW SETS FORTH CERTAIN  PERFORMANCE RATIOS OF THE CORPORATION OR THE
BANK FOR THE PERIODS INDICATED.

<TABLE>
<CAPTION>

                                                      FOR THE THREE MONTHS      FOR THE NINE MONTHS
                                                        ENDED DECEMBER 31,        ENDED DECEMBER 31,
                                                      --------------------      --------------------
                                                          1996       1995         1996        1995
                                                          ----       ----         ----        ----



RETURN ON AVERAGE ASSETS (net income
<S>                                                     <C>       <C>          <C>          <C>    
  divided by average total assets) (1)                    0.84%     0.64%        0.33%(3)     0.65%

RETURN ON AVERAGE EQUITY (net income
  divided by average equity) (1)                          8.91%     9.10%        3.51%(3)     9.16%

AVERAGE EQUITY TO AVERAGE ASSETS                          9.50%     7.08%        9.43%        7.16%
  (average equity divided by average total assets)

EQUITY TO ASSETS AT PERIOD END                            9.27%     7.05%        9.27%        7.05%

INTEREST RATE SPREAD (1) (2)                              2.61%     2.57%        2.76%        2.66%

NET INTEREST MARGIN (net yield on average
  interest-earning assets)                                3.22%     2.75%        3.17%        2.84%

NON-PERFORMING ASSETS TO TOTAL ASSETS                      N/A       N/A          N/A          N/A

AVERAGE INTEREST-EARNING ASSETS TO
  AVERAGE INTEREST-BEARING LIABILITIES                  116.40%   104.43%      110.55%      104.40%

NET INTEREST INCOME AFTER PROVISION FOR
  LOAN LOSSES TO NON-INTEREST EXPENSE                   130.39%   124.88%      106.73%(3)   124.22%

NON-INTEREST EXPENSE TO AVERAGE ASSETS (1)                1.77%     1.77%        2.50%(3)     1.80%

</TABLE>


(1)  ANNUALIZED.

(2)   INTEREST  RATE SPREAD  REPRESENTS  THE  DIFFERENCE  BETWEEN  THE  WEIGHTED
      AVERAGE YIELD ON INTEREST-EARNING  ASSETS AND THE WEIGHTED AVERAGE RATE ON
      INTEREST-BEARING LIABILITIES.
      COMPUTED ON THE BASIS OF AVERAGE MONTHLY VALUES.

(3)  INCLUDES EFFECT OF ONE-TIME SPECIAL ASSESSMENT TO RECAPITALIZE THE SAIF.


                                      11

<PAGE>



                          PART II - OTHER INFORMATION



      Item 1.       Legal Proceedings

                    The  Corporation  was not  involved  in any  material  legal
                    proceedings  at December  31, 1996.  The Bank,  from time to
                    time, is a party to litigation, which arises in the ordinary
                    course of business,  such as claims to enforce liens, claims
                    involving the making and servicing of loans, claims relating
                    to the hiring or termination of employees,  and other issues
                    incident  to the  business  of the Bank.  In the  opinion of
                    management,  the resolution of these lawsuits would not have
                    a material  adverse  effect on the  financial  condition  or
                    results of operations of the Bank or the Corporation.

      Item 2.       Changes in Securities

                    Not applicable.

      Item 3.       Defaults Upon Senior Securities

                    Not applicable.

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

                    Not applicable.

      Item 5.       Other Information

                    On January 10, 1997, the Company completed a "Modified Dutch
                    Auction"  self-tender  offering which  commenced on November
                    25, 1996. A total of 1,431 shares were  purchased at a price
                    of $15.00 per share.  The aggregate  purchase price and cost
                    associated with the offering will reduce total stockholders'
                    equity by  approximately  $ 47,000 during the quarter ending
                    March 31, 1997.

      Item 6.       Exhibits and Reports on Form 8-K

                    (a)  Exhibits

                         Exhibit 11: Statement regarding computation of earnings
                         per share.
                         Exhibit 27:  Financial  Data  Schedule  (included  with
                         electronic filing only)

                    (b)  Reports on Form 8-K  -  None



                                      12

<PAGE>




                        WESTWOOD FINANCIAL CORPORATION

                                  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.


                                           Westwood Financial Corporation



Date:  February 14, 1997      By:          /s/ William J. Woods
      -------------------                  --------------------------------
                                           William J. Woods
                                           Chief Executive Officer
                                           (Principal Executive Officer)



Date:  February 14, 1997      By:          /s/ George E. Niemczyk
      -------------------                  --------------------------------
                                           George E. Niemczyk
                                           Controller
                                           (Principal Accounting and Financial 
                                             Officer)