---

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

---

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

For the quarterly period ended September 30, 1999

OR

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

For the transition period from ______________ to _________________

Commission File Number: 333-00724

VALLEY RIDGE FINANCIAL CORP.
(Exact Name of Small Business Issuer as Specified in its Charter)

|Michigan                                 | 38-2888214                       
|---------------------------------------- | ---------------------------------
|(State or Other Jurisdiction of          | (IRS Employer Identification No.)
|Incorporation or Organization)           |                                  
|                                         |                                  
|450 West Muskegon Avenue                 | (616) 678-5911                   
|Kent City, Michigan 49330                | (Issuer's Telephone Number,      
|(Address of Principal Executive Offices) | Including Area Code)             

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

There were 628,786 shares of Common Stock (no par value) outstanding as of September 30, 1999.

Transitional Small Business Disclosure Format (check one): Yes _____      No X.

---

---

VALLEY RIDGE FINANCIAL CORP.

FORM 10-QSB

INDEX

---

|PART I.    | Financial Information                                              | Page No.                                                        
|---------- | ------------------------------------------------------------------ | ----------------------------------------------------------------
|           |                                                                    |                                                                 
|           | Item 1.  Financial Statements                                      |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    | Condensed Consolidated Balance Sheets -                         
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    | Condensed Consolidated Statements of Income - Three             
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    | Consolidated Statements of Comprehensive Income - Three         
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    | Condensed Consolidated Statements of Cash Flows -               
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    |                                                                 
|           |                                                                    | Notes to Condensed Consolidated Financial Statements (Unaudited)
|           |                                                                    |                                                                 
|           | Item 2.  Management's Discussion and Analysis or Plan of Operation | 9                                                               
|           |                                                                    |                                                                 
|PART II.   | Other Information                                                  |                                                                 
|           |                                                                    |                                                                 
|           | Item 6.  Exhibits and Reports on Form 8-K                          | 13                                                              
|           |                                                                    |                                                                 
|SIGNATURES |                                                                    |                                                                 

---

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements.

VALLEY RIDGE FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

---

|                                                         | September 30,  |   | December 31,   |  
|-------------------------------------------------------- | -------------- | - | -------------- | -
|                                                         | 1999           |   | 1998           |  
|                                                         | (Unaudited)    |   |                |  
|ASSETS                                                   |                |   |                |  
|Cash and due from banks                                  | $    6,885,996 |   | $    5,553,484 |  
|Federal funds sold                                       | 0              |   | 500,000        |  
|Total cash and cash equivalents                          | 6,885,996      |   | 6,053,484      |  
|                                                         |                |   |                |  
|Securities                                               | 32,018,759     |   | 30,646,690     |  
|                                                         |                |   |                |  
|Loans held for sale                                      | 3,732,704      |   | 3,670,761      |  
|                                                         |                |   |                |  
|Total loans                                              | 110,098,824    |   | 99,433,953     |  
|Allowance for loan losses                                | (1,376,462     | ) | (1,388,700     | )
|                                                         | 108,722,362    |   | 98,045,253     |  
|Premises and equipment - net                             | 5,146,783      |   | 5,721,881      |  
|Other assets                                             | 4,572,174      |   | 4,057,041      |  
|                                                         |                |   |                |  
|Total assets                                             | $161,078,778   |   | $148,195,110   |  
|                                                         |                |   |                |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                     |                |   |                |  
|Deposits                                                 |                |   |                |  
|Noninterest-bearing                                      | $  19,997,730  |   | $  20,473,900  |  
|Interest-bearing                                         | 95,651,790     |   | 99,108,851     |  
|                                                         | 115,649,520    |   | 119,582,751    |  
|                                                         |                |   |                |  
|Securities sold under agreement to repurchase            | 1,070,078      |   | 1,204,014      |  
|Federal funds purchased                                  | 6,800,000      |   | 0              |  
|Other borrowings                                         | 22,000,000     |   | 11,000,000     |  
|Accrued expenses and other liabilities                   | 953,986        |   | 1,923,894      |  
|Total liabilities                                        | 146,473,584    |   | 133,710,659    |  
|                                                         |                |   |                |  
|Shareholders' equity                                     |                |   |                |  
|Common stock, no par value: 2,000,000 shares authorized; |                |   |                |  
|628,786 and 622,573 shares outstanding at                |                |   |                |  
|September 30, 1999 and December 31, 1998, respectively   | 7,879,468      |   | 7,666,697      |  
|Retained earnings                                        | 6,892,685      |   | 6,007,862      |  
|Unearned restricted stock                                | (82,537        | ) | (40,441        | )
|Net unrealized gain on securities available for sale     | (84,422        | ) | 850,333        |  
|Total shareholders' equity                               | 14,605,194     |   | 14,484,451     |  
|                                                         |                |   |                |  
|Total liabilities and shareholders' equity               | $161,078,778   |   | $148,195,110   |  

---

See accompanying notes to condensed consolidated financial statements

---

VALLEY RIDGE FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

---

|                                                    | Three Months Ended |   | Nine Months Ended
|--------------------------------------------------- | ------------------ | - | -----------------
|                                                    | September 30,      |   | September 30,    
|                                                    | 1999               |   | 1998             
|Interest income                                     |                    |   |                  
|Loans, including fees                               | $2,495,729         |   | $2,289,038       
|Federal funds sold                                  | 826                |   | 38,873           
|Investment securities                               | 474,240            |   | 377,932          
|                                                    |                    |   |                  
|Interest expense                                    |                    |   |                  
|Deposits                                            | 873,949            |   | 940,633          
|Other                                               | 302,720            |   | 171,214          
|                                                    | 1,176,669          |   | 1,111,847        
|                                                    |                    |   |                  
|Net interest income                                 | 1,794,126          |   | 1,593,996        
|                                                    |                    |   |                  
|Provision for loan losses                           | 37,500             |   | 37,500           
|                                                    |                    |   |                  
|Net interest income after provision for loan losses | 1,756,626          |   | 1,556,496        
|                                                    |                    |   |                  
|Other income                                        |                    |   |                  
|Service charges and other income                    | 319,976            |   | 248,792          
|Gain (loss) on sales of investment securities       | 494                |   | 46,198           
|Gain on sale of fixed assets                        | 5,000              |   | 0                
|Gain (loss) on sale of loans                        | (695               | ) | 3,122            
|                                                    | 324,775            |   | 298,112          
|Other expense                                       |                    |   |                  
|Salaries and benefits                               | 754,432            |   | 715,009          
|Occupancy                                           | 95,201             |   | 112,059          
|Furniture and fixtures                              | 119,919            |   | 88,171           
|Other                                               | 571,974            |   | 470,243          
|                                                    | 1,541,526          |   | 1,385,482        
|                                                    |                    |   |                  
|Income before federal income tax                    | 539,875            |   | 469,126          
|                                                    |                    |   |                  
|Federal income tax expense                          | 124,245            |   | 81,901           
|                                                    |                    |   |                  
|Net income                                          | $    415,630       |   | $    387,225     
|                                                    |                    |   |                  
|Net income per share                                | $           .67    |   | $           .62  

---

See accompanying notes to condensed consolidated financial statements

---

VALLEY RIDGE FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

---

|                                        |  | Three Months Ended |   | Nine Months Ended
|--------------------------------------- |  | ------------------ | - | -----------------
|                                        |  | September 30,      |   | September 30,    
|                                        |  | 1999               |   | 1998             
|                                        |  |                    |   |                  
|Net income                              |  | $415,630           |   | $387,225         
|                                        |  |                    |   |                  
|Other comprehensive income, net of tax: |  |                    |   |                  
|Change in unrealized gains              |  |                    |   |                  
|(losses) on securities                  |  | (138,437           | ) | 299,267          
|                                        |  |                    |   |                  
|                                        |  |                    |   |                  
|Comprehensive income                    |  | $277,193           |   | $686,492         

---

See accompanying notes to condensed consolidated financial statements

---

VALLEY RIDGE FINANCIAL CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

---

|                                                            | Nine Months Ended |  
|----------------------------------------------------------- | ----------------- | -
|                                                            | September 30,     |  
|                                                            | 1999              |  
|Cash flows from operating activities                        |                   |  
|Net income                                                  | $1,353,299        |  
|Adjustments to reconcile net income                         |                   |  
|to net cash from operating activities                       |                   |  
|Depreciation                                                | 349,832           |  
|Amortization of:                                            |                   |  
|Premiums and discounts on securities, net                   | 78,675            |  
|Goodwill and core deposit intangibles                       | 3,580             |  
|Provision for loan losses                                   | 112,500           |  
|(Gain) loss on sale of securities                           | 8,680             |  
|(Gain) loss on sale of loans                                | 10,446            |  
|(Gain) loss on sale of fixed assets                         | (93,371           | )
|Loans originated for sale                                   | (3,851,988        | )
|Proceeds from loans sold                                    | 4,243,488         |  
|Net change in:                                              |                   |  
|Accrued interest receivable and other assets                | (518,713          | )
|Accrued expenses and other liabilities                      | (429,257          | )
|Net cash from operating activities                          | 1,267,171         |  
|                                                            |                   |  
|Cash flows from investing activities                        |                   |  
|Net change in loans                                         | (11,253,498       | )
|Proceeds from:                                              |                   |  
|Sales of securities available for sale                      | 4,393,677         |  
|Repayments and maturities of securities available for sale  | 3,577,390         |  
|Premises and equipment                                      | 318,637           |  
|Purchase of:                                                |                   |  
|Securities available for sale                               | (10,846,787       | )
|Net cash used in investing activities                       | (13,810,580       | )
|                                                            |                   |  
|Cash flows from financing activities                        |                   |  
|Net change in deposits                                      | (3,933,231        | )
|Advances from Federal Home Loan Bank                        | 19,000,000        |  
|Payment on Federal Home Loan Bank advance                   | (8,000,000        | )
|Net change in Federal Funds purchased                       | 6,800,000         |  
|Net change in securities sold under agreement to repurchase | (133,936          | )
|Proceeds from the sale of stock                             | 111,565           |  
|Dividends paid                                              | (468,476          | )
|Net cash from financing activities                          | 13,375,922        |  
|                                                            |                   |  
|Net change in cash and cash equivalents                     | 832,512           |  
|                                                            |                   |  
|Cash and cash equivalents at beginning of year              | 6,053,484         |  
|                                                            |                   |  
|Cash and cash equivalents at end of period                  | $6,885,996        |  
|                                                            |                   |  
|Supplemental disclosures of cash flow information           |                   |  
|Cash paid during the year for:                              |                   |  
|Interest                                                    | $3,373,536        |  
|Income taxes                                                | 480,339           |  

---

See accompanying notes to condensed consolidated financial statements

---

---

|1. | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The unaudited financial statements for the three and nine months ended September 30, 1999 and September 30, 1998 include the consolidated results of operations of Valley Ridge Financial Corp. (the "Corporation") and its wholly-owned subsidiary, Valley
Ridge Bank (the "Bank"). These consolidated financial statements have been prepared in accordance with the Instructions for Form 10-QSB and Item 310(b) of Regulation S-B and do not include all disclosures required by generally accepted accounting
principles for a complete presentation of the Corporation's financial condition and results of operations. In the opinion of management, the information reflects all adjustments (consisting only of normal recurring accruals) which are necessary in order
to make the financial statements not misleading and for a fair presentation of the results of operations for such periods. The results for the period ended September 30, 1999 should not be considered as indicative of results that may be achieved for a
full year. For further information, refer to the consolidated financial statements and footnotes included in the Corporation's Annual Report on Form 10-KSB for the year ended December 31, 1998.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | ALLOWANCE FOR LOAN LOSSES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The following is a summary of the activity in the allowance for loan losses account for the nine months ended September 30, 1999:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | Balance at January 1, 1999             | $1,388,700 |   | 
| | -------------------------------------- | ---------- | - | 
| | Provision for loan losses charged      |            |   | 
| | to operating expense                   | 112,500    |   | 
| | Recoveries on loans previously charged |            |   | 
| | to the allowance                       | 33,077     |   | 
| | Loans charged off                      | (157,815   | ) | 
| |                                        |            |   | 
| | Balance at September 30, 1999          | $1,376,462 |   | 

---

---

---

|3. | OTHER BORROWINGS                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|   | At September 30, 1999, the Corporation had the following advances from the Federal Home Loan Bank ("FHLB"):

| | Type     | Interest Rate |  | Maturity Date     |  | Amount     
| | -------- | ------------- |  | ----------------- |  | -----------
| |          |               |  |                   |  |            
| | Fixed    | 5.120%        |  | October 22, 2003  |  | $3,000,000 
| | Variable | 5.480         |  | October 27, 1999  |  | 1,000,000  
| | Variable | 5.480         |  | December 6, 1999  |  | 6,000,000  
| | Variable | 5.480         |  | July 10, 2000     |  | 2,000,000  
| | Variable | 5.480         |  | January 10, 2000  |  | 2,000,000  
| | Variable | 5.480         |  | February 16, 2000 |  | 3,000,000  
| | Variable | 5.480         |  | March 6, 2000     |  | 2,000,000  
| | Variable | 5.480         |  | March 21, 2000    |  | 3,000,000  
| |          |               |  |                   |  |            
| |          |               |  |                   |  | $22,000,000

|   | Each advance requires monthly interest payments at either fixed or adjustable rates. The variable rate is based on the FHLB overnight rate and adjusts quarterly. These borrowings are collateralized by nonspecific loans
within the mortgage portfolio up to the principal outstanding.                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | EARNINGS PER COMMON SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Basic earnings and diluted earnings per share are calculated on the basis of the weighted average number of shares outstanding. Earnings per share amounts are based on 622,988 weighted average shares outstanding for the three and nine months ended
September 30, 1999 and 620,212 weighted average shares outstanding for the three and nine months ended September 30, 1998. All share amounts have been restated to reflect stock dividends and splits.

---

---

Item 2.    Management's Discussion and Analysis or Plan of Operation.

The following discussion is designed to provide a review of the consolidated financial condition and results of operations of Valley Ridge Financial Corp. (the "Corporation"). This discussion should be read in conjunction with the consolidated
financial statements and related notes.

Forward-Looking Statements

This discussion and analysis of financial condition and results of operations, and other sections of this report, contain forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections
about the financial services industry, the economy, and about the Corporation itself. Words such as "anticipates," "believes," "estimates," "judgment," "expects," "forecasts," "intends," "is likely," "plans," "predicts," "projects," variations of such
words and similar expressions are intended to identify such forward-looking statements. In addition, the statements under the caption "Year 2000 Readiness Disclosure" are forward-looking statements. Assessments that the Corporation and/or its information
and non-information technology systems are Year 2000 "compliant" or "ready" are statements of belief as to the outcome of future events based in part on information provided by vendors and other third parties that the Corporation has not independently
verified. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Future Factors") that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Therefore,
actual results and outcomes may materially differ from what may be expressed, implied or forecasted in such forward-looking statements.

Future Factors include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations;
changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues, including Year 2000 issues; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies;
trends in customer behavior as well as their ability to repay loans; and changes in the national economy. These are representative of the Future Factors that could cause a difference between an ultimate actual outcome and a preceding forward-looking
statement. The Corporation undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Results of Operations

Net Income:The Corporation reported net income of $415,630 or $0.67 per share for the third quarter of 1999 compared to $387,225 or $0.62 per share for the same period in 1998. Year to date net income was $1,353,299 or $2.17 per share for 1999
compared to $1,171,942 or $1.89 per share for 1998. The improvement for the nine-month period was primarily a result of improved net interest income and increased noninterest income, partially offset by increased noninterest expense.

Net Interest Income: Net interest income increased $200,130 or 13% to $1,794,126 for the three-month period ended September 30, 1999 and $484,961 or 10% to $5,164,109 for the nine-month period ended September 30, 1999 compared to the same
periods in 1998. The increases in net interest income are primarily attributable to increases in net loans of $10.7 million or 11% from December 31, 1998 to September 30, 1999.

---

---

Provision for Loan Losses: The provision for loan losses represents the adjustment to the allowance for loan losses needed to maintain the allowance at a level determined by management to cover inherent losses within the Corporation's loan
portfolio. The allowance for loan losses is based on the application of projected loss ratios to the risk-ratings of loans, both individually and by category. Projected loss ratios incorporate such factors as recent loss experience, current economic
conditions and trends, trends in past due and impaired loans, and risk characteristics of various categories and concentrations of loans. The provision remained constant at $37,500 and $112,500 for the three and nine months ended September 30, 1999
compared to the same periods in 1998. Net charge-offs were approximately $51,000 for the third quarter of 1999 compared to net charge-offs of approximately $38,000 for the same period in 1998. Net charge-offs, year to date were approximately $125,000 as
of September 30, 1999 compared to net charge-offs of approximately $70,000 for 1998. Management will continue to monitor the allowance for loan losses and make additions to the allowance through the provision for loan losses as economic conditions dictate.

Noninterest Income:Noninterest income for the three months ended September 30, 1999 was $324,775 as compared to $298,112 for the same period in 1998. Noninterest income for nine months ended September 30, 1999 increased to $1,125,215 from
$874,473 at September 30, 1998. The increases in noninterest income for the three- and nine-month periods are primarily attributable to gain on the sale of the old bank buildings in Kent City, Michigan, increased service charges, and increased revenue
from the Corporation's investment subsidiary.

Noninterest Expense: Noninterest expense increased to approximately $1.5 million and $4.4 million for the three and nine months ended September 30, 1999 compared to $1.4 million and $3.9 million for the same periods in 1998. Salaries and
benefits increased 5.5% from $715,009 for the three months ended September 30, 1998 to $754,432 for the same period in 1999 and increased 9% from $2,093,184 for the nine months ended September 30, 1998 to $2,282,014 for the same period in 1999. Occupancy
and furniture and fixtures expenses increased approximately $180,000 to $654,509 at September 30, 1999 due to the construction of a new main office in Kent City, Michigan, which opened in July 1998. Other expenses increased from $1,391,684 for the nine
months ended September 30, 1998 to $1,508,021 for the same period in 1999.

Financial Condition, Liquidity, and Capital Resources

Total assets increased 8.7% or $12.9 million to approximately $161.1 million at September 30, 1999 compared to approximately $148.2 million at December 31, 1998. Total liabilities increased 9.5% or $12.8 million to approximately $146.5 million at
September 30, 1999 compared to approximately $133.7 million at December 31, 1998. Borrowings of $11 million from the Federal Home Loan Bank of Indianapolis ("FHLB") funded the increase in total assets. Total shareholders' equity increased by $120,743
to $14,605,194 at September 30, 1999. The change in shareholders' equity is primarily related to the retention of earnings after dividend payouts offset by a decrease in the unrealized gain on securities available for sale of $934,755.

Gross loans increased by $10.7 million or 10.4% to $113.8 million. Deposits decreased by approximately $3.9 million or 3.3% to $115.6 million. The net loan to deposit ratio increased to 97% at September 30, 1999 from 86% at December 31, 1998. The
allowance for loan losses decreased by $12,238 while maintaining a reserve of 1.21% of outstanding loans.

The Corporation paid dividends of $468,476 during the nine months ended September 30, 1999, compared to $465,710 paid during the same period in 1998.

---

---

Shareholders' equity as a percent of total assets was 9.1% at September 30, 1999 compared to 9.8% at December 31, 1998. The Corporation's capital ratios continue to exceed the minimum regulatory levels prescribed by the Board of Governors of the
Federal Reserve System.

Total cash and cash equivalents and investment securities totaled $38.9 million at September 30, 1999 or approximately 24% of total assets. Deposits decreased 3.3% during the first nine months of 1999 and management believes its deposit base will
remain a stable source of funds for the remainder of 1999. Other sources of funding include normal loan repayments, sales and maturities of securities, federal funds available from correspondent banks, and additional advances available from the FHLB. As
of September 30, 1999, the Corporation had outstanding advances from the FHLB totaling $22 million. Management believes that the current level of liquidity is sufficient to meet the normal operating needs of the Corporation.

Year 2000 Readiness Disclosure

The Corporation is currently in the process of addressing an issue that is facing all users of automated information systems. The issue is that many computer systems that process transactions based on two digits representing the year of the transaction
may recognize a date using "00" as the year 1900 rather than the year 2000. The inability to correctly recognize "00" as the year 2000 could affect a wide variety of automated information systems, such as mainframe applications, personal computers and
communication systems, in the form of software failure, errors or miscalculations.

The Corporation has developed a plan to prepare for the year 2000. This plan included the performance of an inventory of hardware and software applications, which has been completed, and non-information technology systems, communicating with third
party vendors, suppliers and customers, and obtaining certifications of compliance from third party providers. The Corporation's core computer services provider, West Shore Computer Services, Inc. ("West Shore") (20% of the stock of which is owned by the
Corporation) has implemented its own plan to perform an inventory of its systems and ensure that its systems are year 2000 compliant. The Corporation believes that West Shore has completed approximately 98% of its plan.

The Corporation had completed approximately 98% of its plan as of September 30, 1999 at a cost of $90,000. This includes costs related to personnel, programming, and hardware and software upgrades and replacements. Management anticipates that an
additional $12,000 in personnel, programming, and hardware and software upgrades and replacements will be required to complete the plan during 1999. While additional unforeseen costs may occur, these costs are not expected to be significant.

The impact of the year 2000 issue on the Corporation will depend not only on corrective actions that the Corporation takes, but also on the way in which year 2000 issues are addressed by governmental agencies, businesses and other third parties that
provide services or data to, or receive services or data from, the Corporation, or whose financial condition or operational capability is important to the Corporation. To reduce this exposure, the Corporation has initiated formal communications with its
significant suppliers and large customers to determine the extent to which the Corporation's interface systems are vulnerable to those third parties' failures to resolve their own year 2000 issues. The Corporation is continuing to seek assurances from its
third party vendors and suppliers confirming that the third parties' software systems are year 2000 compliant or an expected compliance date a reasonable time before December 31, 1999. The Corporation is continuing to seek assurances that the systems of
other companies on which the Corporation's systems rely will be timely converted or modified. If such modifications and conversions are not completed timely, their inability to correctly recognize the year 2000 could have an adverse impact on the
operations of the Corporation.

---

---

The Corporation's credit risk associated with borrowers may increase to the extent borrowers fail to adequately address year 2000 issues. As a result, the Bank identified its material borrowers and has assessed these borrowers' year 2000 readiness. The
material borrowers' year 2000 readiness will be monitored periodically, based on the level of risk that the year 2000 has been estimated to potentially impact the business of each borrower.

The Corporation has prepared general contingency plans to address unforeseen year 2000 issues, including plans in the event that mission critical systems experience difficulties or other significant third parties fail to adequately address year 2000
issues. Such plans principally involve the operation of systems in an off-line environment. This would be accomplished by the manual and desktop computer update of financial records until problems or difficulties are remedied. Internal remediation plans
are being developed in the remaining information and non-information technology areas. The Corporation is also enhancing its existing business resumption plans to reflect year 2000 issues. It is developing plans designed to coordinate the efforts of its
personnel and resources in addressing any year 2000 difficulties that become evident after December 31, 1999. There can be no assurance that any plans will fully mitigate any such difficulties. Furthermore, there may be certain mission critical third
parties, such as utilities or telecommunications companies, where alternative arrangements or other sources are limited or unavailable.

The Corporation believes that, with modifications to existing hardware and software and conversions to new hardware and software, the year 2000 issue should not pose significant operational problems for its computer systems and that costs to be
incurred will not be material to the Corporation's results of operations, liquidity or capital resources.

There can be no guarantee that these estimates will be achieved and actual results could differ from those anticipated. Specific factors that might cause differences include, but are not limited to, the ability of other companies on which the
Corporation's systems rely to modify or convert their systems to be year 2000 compliant, the ability to locate and correct all relevant computer codes, and similar uncertainties. This year 2000 readiness disclosure is in part based upon and repeats
information provided to the Corporation by outside sources, including its customers, suppliers, and other business partners and the vendors and licensors of the Corporation's software, hardware and other systems and equipment. Although the Corporation
believes this outside information is accurate, the Corporation is not the original source of this outside information and has not independently verified the information.

---

---

PART II. OTHER INFORMATION

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

(a)      Exhibits. The following documents are filed as exhibits to this report on Form 10-QSB:

|Exhibit No. |  | Document                                                                                                                                                                                       
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                
|3.1         |  | Restated Articles of Incorporation. Previously filed as an exhibit to the Corporation's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998. Here incorporated by reference.   
|            |  |                                                                                                                                                                                                
|3.2         |  | Bylaws. Previously filed as Exhibit 3(b) to the Corporation's Registration Statement on Form S-4 (Registration Statement No. 333-00724) filed January 30, 1996. Here incorporated by reference.
|            |  |                                                                                                                                                                                                
|27          |  | Financial Data Schedule                                                                                                                                                                        

(b)      Reports on Form 8-K. No reports on Form 8-K were filed during the quarter covered by this Form 10-QSB.

---

---

SIGNATURES

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

|                        | VALLEY RIDGE FINANCIAL CORP.                 
|----------------------- | ---------------------------------------------
|                        | Registrant                                   
|                        |                                              
|                        |                                              
|                        |                                              
|Date: November 12, 1999 | /s/ Michael McHugh                           
|                        | Michael McHugh, Secretary and Treasurer (Duly
|                        | Authorized Signatory for Registrant and      
|                        | Principal Financial and Accounting Officer)  

---

---

EXHIBIT INDEX

|Exhibit No. |  | Document                                                                                                                                                                                       
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                                                
|3.1         |  | Restated Articles of Incorporation. Previously filed as an exhibit to the Corporation's Quarterly Report on Form 10-QSB for the quarter ended June 30, 1998. Here incorporated by reference.   
|            |  |                                                                                                                                                                                                
|3.2         |  | Bylaws. Previously filed as Exhibit 3(b) to the Corporation's Registration Statement on Form S-4 (Registration Statement No. 333-00724) filed January 30, 1996. Here incorporated by reference.
|            |  |                                                                                                                                                                                                
|27          |  | Financial Data Schedule