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 September 30, 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 October 21, 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 September 
          30, 1996 (unaudited) and March 31, 1996 (audited)                   2

          Consolidated  Statements  of Income for the three and 
          six months ended September 30, 1996 and 1995 (unaudited)            3

          Consolidated  Statements  of  Cash  Flows  for the three and
          six months  ended September 30, 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                                                  15

Item 2.   Changes in Securities                                              15

Item 3.   Default Upon Senior Securities                                     15

Item 4.   Submission of Matters to a Vote of Security Holders                15

Item 5.   Other Information                                                  15

Item 6.   Exhibits and Reports on Form 8-K                                   15

SIGNATURES

                                        1


<PAGE>



                  WESTWOOD FINANCIAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                             (Dollars in Thousands)
<TABLE>
<CAPTION>

                                                       WESTWOOD FINANCIAL        WESTWOOD   
                                                           CORPORATION            SAVINGS
                                                          CONSOLIDATED            BANK(1)
                                                       SEPTEMBER 30, 1996     MARCH 31, 1996
                                                       ------------------     --------------
                                                                    (UNAUDITED)
                     ASSETS
                     ------
<S>                                                         <C>                   <C>     
Cash and cash equivalents                                   $  5,080              $  5,208             
Loans receivable, net                                         38,486                34,497
Interest receivable on loans                                     244                   218
FHLB stock, at cost                                              440                   440
Mortgage-backed securities held-to-maturity,                                     
  (market value of $19,504 and $13,266, respectively)         19,587                13,281
Investment securities held-to-maturity,                                          
  (market value of $25,028 and $25,586, respectively)         26,156                25,742
Investment securities available-for-sale,                                        
  (at market value)                                              937                 4,422
Interest receivable on investments                               584                   488
Property and equipment, net                                      758                   750
Goodwill                                                       1,179                 1,238
Prepaid expenses and other assets                                197                   280
                                                            --------              --------
                                                                                 
       TOTAL ASSETS                                         $ 93,648              $ 86,564
                                                            ========              ========
                                                                                 
        LIABILITIES AND SHAREHOLDERS' EQUITY                                     
        ------------------------------------                                     
Liabilities:                                                                     
                                                                                 
  Demand deposits                                           $ 13,539              $ 12,618
  Savings deposits                                            69,886                67,622
  Interest payable on deposits                                   117                   116
  Other liabilities                                              528                    81
  Dividends payable                                               32                     0
                                                            --------              --------
                                                                                 
       Total Liabilities                                      84,102                80,437
                                                            --------              --------
                                                                                 
Commitments and Contingencies                                   --                    --
                                                                                 
Shareholders' equity:                                                            
  Common stock                                                    65                   760
  Paid in capital                                              3,264                 4,414
  Retained earnings                                            6,402                 1,174
  Unearned stock bonus plan shares                              (104)                 (128)
  Unrealized gain/(loss) on securities available-for-sale        (81)                  (93)
                                                                                 
       Total Shareholders' Equity                              9,546                 6,127
                                                            --------              --------
                                                                                 
       TOTAL LIABILITIES AND                                                     
                                                                                 
         SHAREHOLDERS' EQUITY                               $ 93,648              $ 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 SIX MONTHS
                                                     ENDED SEPTEMBER 30,                ENDED SEPTEMBER 30,
                                              -----------------------------       ---------------------------------
                                                   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                               $    729         $    657             $  1,440             $  1,298  
Mortgage-backed securities                          225              215                  449                  427
Investment securities, including O/N deposits       591              507                1,158                  964
Dividends on FHLB stock                               7                9                   14                   17
                                                -------          -------              -------              -------
                                                                                                          
Total interest income                             1,552            1,388                3,061             
                                                                                                          
INTEREST EXPENSE ON DEPOSITS                        872              827                1,716                1,600
                                                -------          -------              -------              -------
                                                                                                          
Net interest income                                 680              561                1,345                1,106
                                                                                                          
Provision for loan losses                             5               12                   40                   27
                                                -------          -------              -------              -------
                                                                                                          
Net interest income after                                                                                         
provision for loan losses                           675              549                1,305                1,079
                                                                                                          
NONINTEREST INCOME                                                                                        
                                                                                                          
Miscellaneous charges and fees                       34               26                   62                   50
Late charges                                          1                2                    3                    4
                                                -------          -------              -------              -------
                                                                                                          
Total noninterest income                             35               28                   65                   54
                                                                                                          
NONINTEREST EXPENSE                                                                                                     
Compensation and employee benefits                  164              150                  330                  307
FDIC insurance and regulatory expenses               54               41                  100                   78
SAIF Special Assessment                             454                0                  454                    0
Depreciation and amortization                        41               38                   81                   76
Data Processing                                      35               29                   69                   57
Occupancy                                            29               31                   57                   57
Loss on sale of securities                           17                0                   17                    0
Other                                               124               76                  212                  146
                                                -------          -------              -------              -------
                                                                                                          
Total noninterest expense                           918              365                1,320                  721
                                                -------          -------              -------              -------
                                                                                                          
INCOME (LOSS) BEFORE INCOME TAXES                  (208)             212                   50                  412
                                                                                                          
INCOME TAX EXPENSE                                  (58)              77                   31                  150
                                                -------          -------              -------              -------
                                                                                                          
NET INCOME (LOSS)                              $   (150)        $    135             $     19             $    262
                                                =======          =======              =======              =======
                                                                                                          
Weighted Average Earnings Per Share            $  (0.23)        $     NM             $   0.03             $     NM
                                                =======          =======              =======              =======
                                                                                                      
Weighted Average Shares Outstanding             646,700               NM              549,038                   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   SIX MONTHS ENDED
                                                          September 30,        September 30,
                                                          -------------        -------------
                                                         1996       1995       1996      1995
                                                         ----       ----       ----      ----

INTEREST OPERATING ACTIVITIES

<S>                                                    <C>        <C>       <C>         <C>    
  NET INCOME                                           $  (150)   $   135   $     19    $   262
                                                       =======    =======    =======    =======
  ADJUSTMENTS TO RECONCILE NET INCOME TO
    NET CASH PROVIDED BY OPERATING ACTIVITIES:
    Depreciation                                            18         14         34         29
    Amortization of good will                               23         23         47         47
    Amortization of stock bonus plan                        12         12         24         24
    Provision for loan losses                                5         12         40         27
    Loss on sale of securities                              17         --         17         --
  (INCREASE) DECREASE IN ASSETS:
    Interest receivable                                    (51)       (89)      (122)       (88)
    Prepaid income taxes                                  (104)       (20)       (81)        11
    Prepaid expenses                                        (6)         6        187        (15)
  INCREASE (DECREASE) IN LIABILITIES:
    Interest payable                                       (11)        (2)         1         25
    Accrued expenses                                       338         13        447        (48)
    Taxes payable                                          (88)       (31)       (23)        11
                                                       -------    -------    -------    ------- 
          TOTAL ADJUSTMENTS                                153        (62)       571         23
                                                       -------    -------    -------    -------
          NET CASH PROVIDED BY OPERATING ACTIVITIES          3         73        590        285
                                                       -------    -------    -------    -------

INVESTING ACTIVITIES:
    Loans made of net repayments                        (1,628)       (26)    (4,029)      (523)
    Purchase of investments - net of sales              (1,771)    (2,330)    (3,240)    (4,298)
    Purchase of office property and equipment              (11)        (8)        12         --
    Reduction of goodwill                                   12         --        (42)       (23)

          NET CASH USED BY INVESTING ACTIVITIES         (3,398)    (2,364)    (7,299)    (4,844)
                                                       -------    -------    -------    ------- 

FINANCING ACTIVITIES:

    Net increase in deposit accounts                     2,098      3,577      3,185      6,194
    Proceeds from sale of stock and reorganization,
       net of conversion costs                              --         --      3,428         --
    Dividends paid                                         (32)       (16)       (32)       (32)
                                                       -------    -------    -------    -------
     NET CASH PROVIDED BY FINANCING ACTIVITIES           2,066      3,561      6,581      6,162
                                                       -------    -------    -------    -------

     INCREASE (DECREASE) IN CASH
       AND CASH EQUIVALENTS                             (1,329)     1,270       (128)     1,603

     CASH AND CASH EQUIVALENTS - Beginning of period     6,409      5,388      5,208      5,055
                                                       -------    -------    -------    -------

     CASH AND CASH EQUIVALENTS - End of period         $ 5,080    $ 6,658    $ 5,080    $ 6,658
                                                       =======    =======    =======    =======

CASH PAID DURING THE PERIOD FOR:
   Interest on deposits                                $   883    $   833    $ 1,715    $ 1,575
   Income taxes                                        $   135    $   128    $   135    $   128
</TABLE>

See notes to consolidated financial statements.

                                        4


<PAGE>





         Notes to Unaudited Interim Consolidated Financial Statements

                              September 30, 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  September  30,
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  September  30, 1995 and
September  30, 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 six months  ended  September  30, 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  September  30,  1995 was not
meaningful due to the conversion and reorganization effective June 6, 1996.

                                        5


<PAGE>




NOTE 3:  RECENT ACCOUNTING PRONOUNCEMENTS

Effective January 1, 1995, the Bank adopted FASB Statement Nos. 114, "Accounting
by Creditors  for  Impairment of a Loan" and 118,  "Accounting  by Creditors for
Impairment of a Loan - Income  Recognition  and  Disclosures."  The provision of
these  statements  are  applicable  to all  loans,  uncollateralized  as well as
collateralized,  except for large groups of  smaller-balance  homogeneous  loans
that are  collectively  evaluated for  impairment and loans that are measured at
fair value or at the lower of cost or fair value. Additionally,  such provisions
apply  to all  loans  that  are  renegotiated  in  trouble  debt  restructurings
involving a modification of terms.

Statement No. 114 requires that impaired  loans be measured based on the present
value of expected future cash flows discounted at the loan's effective  interest
rate or, as a practical expedient,  at the loan's observable market price or the
fair value of the  collateral if the loan is collateral  dependent,  except that
loans  renegotiated as part of a troubled debt  restructuring  subsequent to the
adoption of  Statement  Nos.  114 and 118 must be  measured  for  impairment  by
discounting  the total expected cash flow under the  renegotiated  terms at each
loan's original effective interest rate.

A loan  evaluated for  impairment  pursuant to Statement No. 114 is deemed to be
impaired when, based on current  information and events, it is probable that the
Bank will be unable to collect  all  amounts due  according  to the  contractual
terms of the loan agreement. An insignificant payment delay, which is defined by
the  Bank as up to  ninety  days,  will  not  cause a loan to be  classified  as
impaired.  A loan is not  impaired  during the period of delay in payment if the
Bank  expects to collect  all amounts  due,  including  interest  accrued at the
contractual  interest rate for the period of delay. Thus, a demand loan or other
loan with no stated  maturity is not impaired if the Bank expects to collect all
amounts due, including interest accrued at the contractual interest rate, during
the  period  the loan is  outstanding.  All loans  identified  as  impaired  are
evaluated  independently.  The Bank does not aggregate such loans for evaluation
purposes.

The  adoption  of  Statement  Nos.  114 and 118 did not have a material  adverse
impact on financial condition or operations.

Payments received on impaired loans are applied first to interest receivable and
then to principal.

NOTE 4:  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 will
pay 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 5:  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 September 30 and March 31, 1996
--------------------------------------------------------------------

Total assets at September  30, 1996  amounted to $93.6  million,  an increase of
$7.0  million,  or 8.18% over total assets of March 31, 1996.  This increase was
due primarily to a $3.2 million  increase in deposits as well as net proceeds of
$3.3 million from the June,  1996 initial public offering of the company's stock
("Stock Offering").

The increase in assets  includes a $4.0  million,  or 11.56%,  increase in loans
receivable due to increased  loan  originations,  and a $3.2 million,  or 7.45%,
increase in investment securities.

Total  liabilities  and  shareholders'  equity  amounted  to  $93.6  million  at
September  30,  1996,  an  increase  of  $7.0  million,  or  8.18%,  over  total
liabilities  and  shareholders'  equity  at March  31,  1996.  The  increase  in
liabilities is due primarily to a $3.2 million net increase in deposits, as well
as the $454,000 payable to the Federal Deposit Insurance Corporation ("FDIC") in
settlement of the one-time special Savings Association  Insurance Funds ("SAIF")
assessment  discussed in more detail  below.  The net increase in  shareholder's
equity of $3.4 million is the result of the proceeds of the Stock  Offering,  as
well as a $19,000 net income for the six months ended September 30, 1996.

The Bank had no non-performing loans at September 30, 1996 or at March 31, 1996.

                                        7


<PAGE>



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

General.  Net loss for the three  month  period  ended  September  30,  1996 was
$150,000  compared to a net income of $135,000  for the three month period ended
September 30, 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  mortgage-backed  securities,  which
should have a favorable effect on current as well as future earnings.

Interest  Income.  Interest  income  increased  $164,000,  or 11.82%,  from $1.4
million for the three month period ended  September 30, 1995 to $1.6 million for
the three months ended  September 30, 1996.  Interest income from mortgage loans
increased $72,000 due to increased lending. Interest on security investments and
mortgaged-backed securities increased $94,000 due to higher yields and increased
average  balances of such  investments  funded by increased  deposits as well as
proceeds from the Stock Offering.

Interest  Expense.  Total interest expense increased from $827,000 for the three
month  period  ended  September  30, 1995 to $872,000 for the three month period
ended  September 30, 1996. This increase was due primarily to an increase in the
average  balance of deposits  from $75.9  million at September 30, 1995 to $83.4
million at September 30, 1996.

Net Interest Income. Net interest income increased $119,000,  or 21.21%, for the
three  months  ended  September  30, 1996 as  compared to the same period  ended
September  30,  1995.  This was  primarily  due to  increased  revenue  from the
additional  interest-earning assets acquired through the investment of the Stock
Offering proceeds and the increase in deposits. In addition, net interest margin
(net yield)  increased  from 2.88% for the quarter  ended  September 30, 1995 to
3.05% for the similar 1996 period.

Provision  for Loan  Losses.  Provisions  for the  loan  losses  decreased  from
$12,000, for the period ended September 30, 1995, to $5,000 for the period ended
September  30,  1996.  The decrease was due to  management's  assessment  of the
current loan portfolio, account delinquencies, and market conditions.

There was no basic change in actual delinquencies at either date.

Non-Interest Income. Non-interest income increased $7,000, or 25.00%, during the
period ended  September 30, 1996, as compared to the same period ended September
30,  1995.  This  increase  was  primarily  due to  increased  fee  income  from
additional checking accounts.

Non-Interest Expense.  Non-interest expense increased $553,000 from $365,000 for
the three months ended September 30, 1995 to $918,000 for the three months ended
September  30,1996.  This increase  reflects a $454,000 net charge for a special
assessment by the Savings Association Insurance Fund. Non- interest expense also
increased  due to a  $17,000  loss on a mutual  fund  investment  which was sold
during  the  quarter.   The  mutual  fund  sale  proceeds  were   reinvested  in
mortgage-backed  securities  with higher  yields,  with an  immediate  favorable
effect  on  current  as well as future  earnings.  Advertising  and  promotional
expenses also  increased  $3,000 due to  management's  decision to promote short
term home  equity  loans,  checking  accounts  and its new remote ATM  facility.
Management  also decided to participate in several local  activities to increase
its exposure in the  community.  Operating  costs  incurred as a public  company
including  legal and consulting  fees and auditing  expenses  increased  $28,000
during the period.

                                        8


<PAGE>




Income Tax Expense.  Income tax expenses decreased $135,000 from $77,000 for the
three  months  period  ended  September  30, 1995 to a credit of $58,000 for the
three month period ended September 30, 1996 due to decreased earnings.

                                        9


<PAGE>



Results of  Operations - Comparison  of Six Months Ended  September 30, 1996 and
--------------------------------------------------------------------------------
September 30, 1995
------------------

General.  Net income  for the six month  period  ended  September  30,  1996 was
$19,000  compared to $262,000 for the six month period ended September 30, 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  mortgage-backed  securities,  which should have a
favorable effect on current as well as future earnings.

Interest  Income.  Total interest  income  increased to $3.6 million for the six
months  ended  September  30, 1996 from $2.7  million  for the six months  ended
September 30, 1995. This increase of $355,000,  or 13.12%,  was due primarily to
an increase of $142,000 in interest earned on loans  receivable due to increased
lending, and and increase of $213,000 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  as well as the
receipts from the Stock Offering.

Interest Expense. Total interest expense increased from $1.6 million for the six
months  ended  September  30,  1995 to $1.7  million  for the six  months  ended
September  30,  1996.  This  increase  was due  primarily  to an increase in the
average  balance of deposits  from $75.9  million at September 30, 1995 to $83.4
million at September 30, 1996.

Net Interest Income. Net interest income increased $239,000,  or 21.61%, for the
six months  ended  September  30,  1996 as  compared  to the same  period  ended
September 30, 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 and the increase in deposits.

Provision  for Loan Losses.  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.  The provision for losses
on loans was  increased to $40,000 for the six months ended  September 30, 1996,
compared  to  $27,000  for the six  months  ended  September  30,  1995,  due to
management's  decision to increase the provision due to the increased  volume of
loan activity. There was no basic change in actual delinquencies at either date.

Non-Interest Income.  Non-interest income increased $11,000 from $54,000 for the
six  months  ended  September  30,  1995 to  $65,000  for the six  months  ended
September  30,  1996,  primarily  due to an increase in  personal  and  business
checking accounts which resulted in increased fee income.

Non-Interest  Expense.  Non-interest expense increased $599,000 from $721,000 to
$1.3 million during the comparable  periods ending  September 30, 1995 and 1996,
respectively.  This  increase was  primarily  due to the  one-time  SAIF special
assessment  of $454,000.  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,  additional compensation due to additional staff, additional
costs of an added ATM facility and increased  advertising and promotional  costs
caused  other  operating  expenses  to  increase.  Other  non-interest  expenses
including legal,  consulting and registrar fees, and auditing expenses increased
$32,000, due to the added costs of being a public company.

                                       10


<PAGE>




Income Tax Expense.  Income tax expense decreased $119,000 from $150,000 for the
six month  period ended  September  30, 1995 to $31,000 for the six month period
ended September 30, 1996 due to decreased earnings.

                                       11


<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 September 30, 1996, the Bank
had  no  such  borrowed   funds.   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 September 30, 1996, the Bank had mortgage commitments
to fund  loans  of $2.8  million.  Also,  at  September  30,  1996,  there  were
commitments  on unused  lines of credit  relating to home  equity  loans of $1.8
million.  Certifcates  of  deposit  scheduled  to  mature in one year or less at
September  30,  1996  totaled  $44.4  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 September 30, 1996, the Bank's total liquidity was 60.99%.

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

The following table sets forth the  institution's  capital position at September
30, 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 September 30, 1996
                                                  -----------------------------
                                                    Amount            of Assets
                                                    ------            ---------

GAAP Capital:                                     $  9,546              10.19%
                                                   =======            =======

Leverage Capital:(1)(2)
Actual Leverage Capital                           $  6,645               7.35%
Leverage Capital Requirement                         2,711               3.00%
                                                  --------            -------
  Excess                                          $  3,934               4.35%
                                                  ========            =======
Tier 1 Capital: (1)(3)
  Actual Tier 1 Capital                           $  6,645              18.04%
  Tier 1 Capital Requirement                         1,473               4.00%
                                                  --------           --------
  Excess                                          $  5,172              14.04%
                                                   =======           ========
Total Risk-Based Capital:(1)(3)
  Actual Risk-Based Capital                       $  6,854              18.61%
  Risk-Based Capital Requirement                     2,946               8.00%
                                                  --------           --------
  Excess                                          $  3,908              10.61%
                                                  ========           ========

(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
      $90,366.
(3)   Tier 1 Capital and Total  Risk-Based  Capital are computed as a percentage
      of Total Risk-Weighted Assets of $36,831.

                                       12


<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.

One-Time Assessment
-------------------

   Pursuant to the  Economic  Growth and  Paperwork  Reduction  Act of 1996 (the
"Act"),  the FDIC imposed a special assessment on SAIF members to capitalize the
SAIF at the  designated  reserve level of 1.25% as of October 1, 1996.  Based on
the Bank's  deposits as of March 31, 1995,  the date for measuring the amount of
the  special  assessment  pursuant  to the  Act,  the Bank  will  pay a  special
assessment  of $454,000 on November  27,  1996 to  recapitalize  the SAIF.  This
experience was recognized  during the second quarter of fiscal 1996. The FDIC is
expected  to lower the premium for deposit  insurance  to a level  necessary  to
maintain the SAIF at its required reserve level,  however, the range of premiums
has not been determined at September 30, 1996.

   Pursuant to the Act,  the Bank will pay,  in  addition to its normal  deposit
insurance  premium as a member of the SAIF, an amount equal to approximately 6.4
basis points toward the  retirement of the  Financing  Corporation  bonds ("Fico
Bonds")  issued in the 1980's to assist in the  recovery of the savings and loan
industry.  Member of the Bank Insurance Fund ("BIF"). by contrast,  will pay, in
addition to their normal  deposit  insurance  premium,  approximately  1.3 basis
points.  Based on total  deposits as of September 30, 1996,  had the Act been in
effect, the Bank's Fico annual premium would have been approximately  $53,000 in
addition  to its  normal  deposit  insurance  premium.  Beginning  no later than
January  1,  2000,  the rate paid to  retire  the Fico  Bonds  will be equal for
members of the BIF and the SAIF.  The Act also  provides  for the merging of the
BIF and the SAIF by January 1, 1999 provided there are no financial institutions
still chartered as savings associations at that time. Should the insurance funds
be merged before  January 1, 2000, the rate paid by all members of this new fund
to retire the Fico Bonds would be equal.

Recapture of Bad Debt Reserves
------------------------------

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.

                                       13


<PAGE>




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

THE  TABLE  BELOW  SETS  FORTH  CERTAIN  PERFORMANCE  RATIOS OF THE BANK FOR THE
PERIODS INDICATED.
<TABLE>
<CAPTION>

                                           FOR THE THREE MONTHS    FOR THE SIX MONTHS
                                           ENDED SEPTEMBER 30,     ENDED SEPTEMBER 30,
                                            1996           1995      1996   1995
                                            ----           ----      ----   ----




RETURN ON AVERAGE ASSETS (net income
<S>                                      <C>             <C>       <C>         <C>  
  divided by average total assets) (1)     (0.65%)         0.67%     0.04%       0.66%

RETURN ON AVERAGE EQUITY (net income
  divided by average equity) (1)           (6.19%)         9.37%     0.44%       9.19%

AVERAGE EQUITY TO AVERAGE ASSETS           10.52%          7.13%     9.40%       7.21%
  (average equity divided by average 
  total assets)

EQUITY TO ASSETS AT PERIOD END             10.19%          7.10%    10.19%       7.10%

INTEREST RATE SPREAD (1) (2)                2.69%          2.69%     2.78%       2.71%

NET INTEREST MARGIN (net yield on average
  interest-earning assets)                  3.05%          2.88%     3.07%       2.89%

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

AVERAGE INTEREST-EARNING ASSETS TO
  AVERAGE INTEREST-BEARING LIABILITIES    109.20%        104.33%   107.50%     104.38%

NET INTEREST INCOME AFTER PROVISION FOR
  LOAN LOSSES TO NON-INTEREST EXPENSE      79.20%        124.53%    97.47%     124.03%

NON-INTEREST EXPENSE TO AVERAGE ASSETS (1)  3.62%          2.24%     3.00%       2.26%


</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.

                                       14


<PAGE>



                          PART II - OTHER INFORMATION
                          ---------------------------

      Item 1.     Legal Proceedings
                  -----------------

                  The  Corporation  was  not  involved  in  any  material  legal
                  proceedings  at  September  30, 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
                  -----------------

                  Not applicable.

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

                  (a)   Exhibits

                        Exhibit 11:  Statement regarding computation of earnings
                        per share.

                  (b)   Reports on Form 8-K  -  None

                                       15


<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: November 14, 1996            By:  /s/William J. Woods
      ------------------           -------------------------------
                                   William J. Woods
                                   Chief Executive Officer
                                   (Principal Executive Officer)

Date: November 14, 1996            By:  /s/George E. Niemczyk
      -----------------              -------------------------------
                                   George E. Niemczyk
                                   Controller
                                   (Principal Accounting and Financial Officer)