UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

For the quarterly period ended March 31, 2003

OR

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

Commission File Number: 333-00724

VALLEY RIDGE FINANCIAL CORP.

(Exact Name of Small Business Issuer as Specified in its Charter)

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

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

There were 956,327 shares of Common Stock (no par value) outstanding as of March 31, 2003.

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

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VALLEY RIDGE FINANCIAL CORP.
FORM 10-QSB
INDEX

PART 1.     Financial Information

|                              |                                                                                                                                                         | Page No.
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|                              |                                                                                                                                                         |         
|                              | Item I.     Financial Statements                                                                                                                        |         
|                              |                                                                                                                                                         |         
|                              | Condensed Consolidated Balance Sheets -
  March 31, 2003 (Unaudited) and December 31, 2002                                                              | 3       
|                              |                                                                                                                                                         |         
|                              | Condensed Consolidated Statements of Income and Comprehensive
  Income - Three Months Ended March 31, 2003 (Unaudited)
  and March 31, 2002 (Unaudited) | 4       
|                              |                                                                                                                                                         |         
|                              | Condensed Consolidated Statements of Cash Flows -
  Three Months Ended March 31, 2003 (Unaudited) and
  March 31, 2002 (Unaudited)                      | 5       
|                              |                                                                                                                                                         |         
|                              | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                        | 6       
|                              |                                                                                                                                                         |         
|                              |                                                                                                                                                         |         
|                              | Item 2.  Management's Discussion and Analysis or Plan of
             Operation                                                                         | 7       
|                              |                                                                                                                                                         |         
|                              | Item 3. Controls and Procedures                                                                                                                         | 12      
|                              |                                                                                                                                                         |         
|PART II.                      | Other Information                                                                                                                                       |         
|                              |                                                                                                                                                         |         
|                              | Item 6. Exhibits and Reports on Form 8-K                                                                                                                | 12      
|                              |                                                                                                                                                         |         
|                              |                                                                                                                                                         |         
|SIGNATURES AND CERTIFICATIONS | 13-15                                                                                                                                                  

---

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

VALLEY RIDGE FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

|
|

|                                                      |   | March 31,2003
(Unaudited) |   |   | December 31,2002 |  
|----------------------------------------------------- | - | ------------------------- | - | - | ---------------- | -
|ASSETS                                                |   |                           |   |   |                  |  
|Cash and due from financial institutions              | $ | 6,290,257                 |   | $ | 6,758,885        |  
|Federal funds sold                                    |   | 7,950,000                 |   |   | 6,050,000        |  
|Cash and cash equivalents                             |   | 14,240,257                |   |   | 12,808,885       |  
|                                                      |   |                           |   |   |                  |  
|Securities available for sale                         |   | 43,208,318                |   |   | 42,488,239       |  
|Other securities                                      |   | 1,561,228                 |   |   | 1,561,228        |  
|Loans held for sale                                   |   | 1,560,400                 |   |   | 1,037,350        |  
|                                                      |   |                           |   |   |                  |  
|Loans                                                 |   | 122,551,561               |   |   | 122,705,416      |  
|Allowance for loan losses                             |   | (1,783,801                | ) |   | (1,631,977       | )
|                                                      |   | 120,767,760               |   |   | 121,073,439      |  
|                                                      |   |                           |   |   |                  |  
|Accrued interest receivable                           |   | 1,103,745                 |   |   | 958,068          |  
|Premises and equipment, net                           |   | 5,141,502                 |   |   | 5,100,916        |  
|Cash surrender value of life insurance policies       |   | 3,080,411                 |   |   | 3,055,511        |  
|Other assets                                          |   | 1,090,678                 |   |   | 1,216,172        |  
|                                                      |   |                           |   |   |                  |  
|Total assets                                          | $ | 191,754,299               |   | $ | 189,299,808      |  
|                                                      |   |                           |   |   |                  |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                  |   |                           |   |   |                  |  
|Deposits                                              |   |                           |   |   |                  |  
|Noninterest-bearing                                   | $ | 24,951,788                |   | $ | 25,443,616       |  
|Interest-bearing                                      |   | 119,423,670               |   |   | 114,885,649      |  
|Total                                                 |   | 144,375,458               |   |   | 140,329,265      |  
|                                                      |   |                           |   |   |                  |  
|Securities sold under agreement to repurchase         |   | 5,732,617                 |   |   | 5,083,361        |  
|Federal Home Loan Bank advances                       |   | 19,500,000                |   |   | 22,000,000       |  
|Accrued expenses and other liabilities                |   | 2,535,403                 |   |   | 2,635,002        |  
|Total liabilities                                     |   | 172,143,478               |   |   | 170,047,628      |  
|                                                      |   |                           |   |   |                  |  
|Shareholders' equity                                  |   |                           |   |   |                  |  
|Common stock and additional paid-in capital,          |   |                           |   |   |                  |  
|no par value: 2,000,000 shares authorized and 956,327 |   |                           |   |   |                  |  
|and 954,384 shares outstanding at March 31, 2003 and  |   |                           |   |   |                  |  
|December 31, 2002                                     |   | 8,212,648                 |   |   | 8,158,672        |  
|Retained earnings                                     |   | 10,939,433                |   |   | 10,586,871       |  
|Unearned restricted stock                             |   | (159,700                  | ) |   | (159,700         | )
|Accumulated other comprehensive income                |   | 618,440                   |   |   | 666,337          |  
|Total shareholders' equity                            |   | 19,610,821                |   |   | 19,252,180       |  
|                                                      |   |                           |   |   |                  |  
|Total liabilities and shareholders' equity            | $ | 191,754,299               |   | $ | 189,299,808      |  

See accompanying notes to condensed financial statements.

---

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

|
|

|                                                    |   | ------Three Months Ended----- | 
|--------------------------------------------------- | - | ----------------------------- | 
|                                                    |   | March 31,2003                 | 
|Interest income                                     |   |                               | 
|Loans, including fees                               | $ | 2,338,071                     | 
|Federal funds sold                                  |   | 27,627                        | 
|Securities                                          |   | 437,979                       | 
|Total interest income                               |   | 2,803,677                     | 
|                                                    |   |                               | 
|Interest expense                                    |   |                               | 
|Deposits                                            |   | 714,512                       | 
|Other                                               |   | 256,324                       | 
|Total interest expense                              |   | 970,836                       | 
|                                                    |   |                               | 
|Net interest income                                 |   | 1,832,841                     | 
|                                                    |   |                               | 
|Provision for loan losses                           |   | 45,000                        | 
|                                                    |   |                               | 
|Net interest income after provision for loan losses |   | 1,787,841                     | 
|                                                    |   |                               | 
|Noninterest income                                  |   |                               | 
|Service charges                                     |   | 332,663                       | 
|Net gains on sales of securities                    |   | 6,732                         | 
|Net gains on sales of loans                         |   | 374,077                       | 
|Income earned on life insurance policies            |   | 45,000                        | 
|Other income                                        |   | 116,184                       | 
|Total noninterest income                            |   | 874,656                       | 
|                                                    |   |                               | 
|Noninterest expense                                 |   |                               | 
|Salaries and benefits                               |   | 998,847                       | 
|Occupancy                                           |   | 139,254                       | 
|Furniture and fixtures                              |   | 152,546                       | 
|Other expense                                       |   | 636,887                       | 
|Total noninterest expense                           |   | 1,927,534                     | 
|                                                    |   |                               | 
|Income before federal income tax                    |   | 734,963                       | 
|                                                    |   |                               | 
|Federal income tax expense                          |   | 191,135                       | 
|                                                    |   |                               | 
|Net income                                          | $ | 543,828                       | 
|Comprehensive income                                | $ | 495,931                       | 
|                                                    |   |                               | 
|Basic and diluted earnings per share                | $ | .57                           | 

See accompanying notes to condensed financial statements.

---

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

|
|

|                                                           |   | -----Three Months Ended----- |  
|---------------------------------------------------------- | - | ---------------------------- | -
|                                                           |   | March 31,2003                |  
|Cash flows from operating activities                       |   |                              |  
|Net income                                                 | $ | 543,828                      |  
|Adjustments to reconcile net income                        |   |                              |  
|to net cash from operating activities                      |   |                              |  
|Depreciation and amortization                              |   | 134,654                      |  
|Amortization of premiums and discounts on securities, net  |   | 76,848                       |  
|Provision for loan losses                                  |   | 45,000                       |  
|Net gains on sales of securities                           |   | (6,732                       | )
|Net gains on sales of loans                                |   | (374,077                     | )
|Loans originated for sale                                  |   | (15,656,500                  | )
|Proceeds from loans sold                                   |   | 15,507,527                   |  
|Net change in:                                             |   |                              |  
|Accrued interest receivable and other assets               |   | (45,083                      | )
|Accrued interest payable and other liabilities             |   | (74,925                      | )
|Net cash from operating activities                         |   | 150,540                      |  
|                                                           |   |                              |  
|Cash flows from investing activities                       |   |                              |  
|Loan originations and payments, net                        |   | 260,679                      |  
|Proceeds from:                                             |   |                              |  
|Sales of securities available for sale                     |   | 1,699,476                    |  
|Repayments and maturities of securities available for sale |   | 9,583,721                    |  
|Purchase of:                                               |   |                              |  
|Securities available for sale                              |   | (12,145,963                  | )
|Premises and equipment                                     |   | (175,240                     | )
|Net cash used in investing activities                      |   | (777,327                     | )
|                                                           |   |                              |  
|Cash flows from financing activities                       |   |                              |  
|Net increase in deposits                                   |   | 4,046,193                    |  
|Net increase in securities sold under agreements           |   |                              |  
|to repurchase                                              |   | 649,256                      |  
|Net decrease in federal funds purchased                    |   | 0                            |  
|Repayments of Federal Home Loan Bank advances              |   | (2,500,000                   | )
|Stock options exercised                                    |   | 53,976                       |  
|Dividends paid                                             |   | (191,266                     | )
|Net cash from financing activities                         |   | 2,058,159                    |  
|                                                           |   |                              |  
|Net change in cash and cash equivalents                    |   | 1,431,372                    |  
|                                                           |   |                              |  
|Cash and cash equivalents at beginning of year             |   | 12,808,885                   |  
|                                                           |   |                              |  
|Cash and cash equivalents at end of period                 | $ | 14,240,257                   |  

See accompanying notes to condensed financial statements.

---

VALLEY RIDGE FINANCIAL CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

|
|

|1. | BASIS OF PRESENTATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The unaudited financial statements as of March 31, 2003 and for the three months ended March 31, 2003 and 2002 include the consolidated results of operations of Valley Ridge Financial Corp. (the "Corporation") and its wholly-owned subsidiary, Valley Ridge Bank (the "Bank"), and its wholly-owned subsidiaries, Valley Ridge Realty, Inc., Valley Ridge Mortgage Company, Inc., and Valley Ridge Financial Services, Inc. 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 accounting principles generally accepted in the United States of America 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 March 31, 2003 should not be considered as indicative of results 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, 2002.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | STOCK OPTIONS:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at the date of grant. During the periods ended March 31, 2003 and 2002, there were no stock options granted. Because options are immediately vested, there was no proforma effect on net income or earnings per share, for the periods ended March 31, 2003 and 2002, using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|3. | EARNINGS PER COMMON SHARE:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Basic earnings per share is based on weighted-average common shares outstanding. Diluted earnings per common share includes the dilutive effect of additional potential common shares issuable under stock options. Basic earnings per share amounts are based on 955,697 and 949,919 shares outstanding for the three months ended March 31, 2003 and 2002, respectively. Diluted earnings per share amounts are based on 958,228 and 952,882 shares outstanding for the three months ended March 31, 2003 and 2002, respectively. Earnings and dividends per share are restated for all stock splits and dividends through the date of issue of the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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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 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. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions ("Risk 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.

Risk 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; 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 and local economies. In addition, events relating to the war on terrorism and other military actions, including the war in Iraq have created significant global economic and political uncertainties that may have material and adverse effects on financial markets, the economy, and demand for financial services and products. These are representative of the Risk 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 $543,828 or $.57 per share for the first quarter of 2003 compared to $485,376 or $.51 per share for the first quarter of 2002. The change was primarily a result of improved noninterest income offset by a decrease in the Corporation's net interest margin compared to the first quarter of 2002. Management is not aware of any existing trends, events, uncertainties or current recommendations by regulatory authorities that are expected to have a material impact on the Corporation's future operating results.

---

The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the related yields, as well as the interest expense on average interest-bearing liabilities. For tax-exempt securities and loans, interest income and yield have been computed on a tax equivalent basis using a marginal tax rate of 34%.

|                          |   | Three Months Ended March 31,                       |  
|------------------------- | - | -------------------------------------------------- | -
|                          |   | -------------------------2 0 0 3------------------ |  
|                          |   | AverageBalance                                     |  
|                          |   |                                                    |  
|Taxable securities        | $ | 31,095,326                                         |  
|Tax-exempt securities     |   | 10,732,161                                         |  
|Loans (1) (2)             |   | 121,995,756                                        |  
|Federal funds sold        |   | 9,443,884                                          |  
|Total earning assets      |   | 173,267,127                                        |  
|                          |   |                                                    |  
|Nonaccrual loans          |   | 363,657                                            |  
|                          |   |                                                    |  
|Less allowance for        |   |                                                    |  
|loan losses               |   | (1,709,472                                         | )
|Cash and due from banks   |   | 6,930,911                                          |  
|Other nonearning assets   |   | 9,875,694                                          |  
|                          |   |                                                    |  
|Total assets              | $ | 188,727,917                                        |  
|                          |   |                                                    |  
|Interest-bearing deposits | $ | 116,980,758                                        |  
|Other borrowings          |   | 25,710,334                                         |  
|Total interest-bearing    |   |                                                    |  
|liabilities               |   | 142,691,092                                        |  
|Demand deposits           |   | 24,848,187                                         |  
|Other liabilities         |   | 1,877,540                                          |  
|Total liabilities         |   | 169,416,819                                        |  
|Average equity            |   | 19,311,098                                         |  
|                          |   |                                                    |  
|Total liabilities and     |   |                                                    |  
|equity                    | $ | 188,727,917                                        |  
|                          |   |                                                    |  
|Net interest income       |   |                                                    |  
|Rate spread               |   |                                                    |  
|Net interest margin       |   |                                                    |  

|(1) | Average outstanding balances exclude non-accruing loans.
|--- | --------------------------------------------------------
|(2) | Includes loans held for sale.                           

The following table presents the dollar amount of change in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and change due to rate.

---

|                                        |   | Three Months Ended March 31,                  |  
|--------------------------------------- | - | --------------------------------------------- | -
|                                        |   | ----------------2003 over 2002--------------- |  
|                                        |   | Total                                         |  
|Increase (decrease) in interest income  |   |                                               |  
|Taxable investment securities           | $ | 56,919                                        |  
|Tax-exempt securities                   |   | 1,075                                         |  
|Loans (including loans held for sale)   |   | (149,449                                      | )
|Federal funds sold                      |   | 5,026                                         |  
|Net change in tax-equivalent income     |   | (86,429                                       | )
|                                        |   |                                               |  
|Increase (decrease) in interest expense |   |                                               |  
|Interest-bearing deposits               |   | 30,304                                        |  
|Other borrowings                        |   | (13,831                                       | )
|Net change in interest expense          |   | 16,473                                        |  
|                                        |   |                                               |  
|Net change in net interest income (tax  |   |                                               |  
|equivalent)                             | $ | (102,902                                      | )

Net Interest Income: Net interest income decreased $102,000 or 5% to $1,833,000 for the three-month period ended March 31, 2003 compared to the same period in 2002. The decrease in net interest income is primarily attributable to decreases in interest rates over the past twelve months, which has unfavorably affected the Corporation's net interest income.

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 consistent at $45,000 for the three months ended March 31, 2003 and 2002. Net recoveries were approximately $107,000 for the first quarter of 2003 compared to net recoveries of approximately $80,000 for the first quarter of 2002. The Corporation has recovered approximately $147,000 in 2003 relating to a large commercial loan charged off during the fourth quarter of 2001. 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.

---

The following summarizes changes in the allowance for loan losses:

|                                               |   | As of and for the Three
Months Ended March 31, |  
|---------------------------------------------- | - | ---------------------------------------------- | -
|                                               |   | 2003                                           |  
|                                               |   |                                                |  
|Balance at beginning of period                 | $ | 1,631,977                                      |  
|Provision for loan losses                      |   | 45,000                                         |  
|                                               |   |                                                |  
|Recoveries on loans charged off                |   | 147,453                                        |  
|Loans charged off                              |   | (40,629                                        | )
|Net recoveries                                 |   | 106,824                                        |  
|                                               |   |                                                |  
|Balance at end of period                       | $ | 1,783,801                                      |  
|                                               |   |                                                |  
|Allowance for loan losses as a percentage of   |   |                                                |  
|total loans at end of period                   |   | 1.5                                            | %
|                                               |   |                                                |  
|Ratio of net recoveries to average total loans |   |                                                |  
|outstanding during the period                  |   | .09                                            | %

Noninterest Income:Noninterest income for the three months ended March 31, 2003 was approximately $875,000 as compared to approximately $579,000 for the same period in 2002. The increased service charge income is reflective of deposit growth experienced during 2002. Net gains on sales of loans has increased by approximately $228,000 for the three months ended March 31, 2003 compared to the same period in 2002 due to the continued refinancing activity from the low interest rate environment.

Noninterest Expense: Noninterest expense increased by approximately $126,000 for the three months ended March 31, 2003 compared to the same period in 2002. Salaries and benefits, the largest component of noninterest expense, increased 4% to $998,847 for the three months ended March 31, 2003 compared to $960,481 for the same period in 2002. The increase in salaries and benefits reflects annual salary increases and additional employees. Occupancy and furniture and fixture expenses increased approximately $22,000 to $291,800, due to the addition of a new branch location.

Financial Condition, Liquidity, and Capital Resources

Total assets increased approximately 1.3% or by $2.5 million to $191.8 million at March 31, 2003 compared to $189.3 million at December 31, 2002. Total liabilities increased by 1.2% or by $2.1 million to $172.1 million at March 31, 2003 compared to $170.0 million at December 31, 2002. Total shareholders' equity increased by approximately $359,000 to $19.6 million at March 31, 2003. The increase 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.

---

Total loans remained relatively stable at $122.6 million. Deposits increased by approximately $4.0 million or 2.9% to $144.4 million. The net loan to deposit ratio has decreased to 83.6% for the period ended March 31, 2003 from 86.3% for the period ended December 31, 2002. The allowance for loan losses maintained a reserve of 1.5% of total loans.

The Corporation paid a dividend of $191,266 in the first quarter of 2003, compared to $190,005 in the first quarter of 2002.

Shareholders' equity as a percent of total assets was 10.2% at March 31, 2003 and December 31, 2002. The Corporation's capital ratios continue to exceed the minimum regulatory levels prescribed by the Federal Reserve Board.

Total cash, cash equivalents and investment securities totaled approximately $59.0 million at March 31, 2003 or approximately 30.8% of total assets. The principal source of funding for the Corporation continues to come from its deposit customers, which have historically been a stable source of funds. 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 Federal Home Loan Bank. Management believes that the current level of liquidity is sufficient to meet the normal operating needs of the Bank.

Securities sold under agreements to repurchase generally mature within one to three days from the transaction date. The Corporation has pledged certain investment securities, which are held in safekeeping, as collateral against these borrowings. Repurchase agreements totaled approximately $5.7 million at March 31, 2003 compared to $5.1 million at December 31, 2002.

The Corporation had $19.5 million in advances from the Federal Home Loan Bank at March 31, 2003 compared to $22.0 million at December 31, 2002. Each advance requires monthly interest payments at either fixed or adjustable rates. These borrowings are collateralized by nonspecific loans within the mortgage portfolio up to the principal outstanding and specific qualifying securities within the securities portfolio.

Impact of Inflation and Changing Prices

Most assets and liabilities of a financial institution are monetary in nature. This differs from most commercial and industrial companies that have significant investments in fixed assets or inventories. The effect of inflation on financial institutions is to a large extent indirect and the measure of such impact is largely subjective.

Noninterest expenses tend to rise during periods of general inflation. Inflation levels are to some degree reflected in interest rates. Changes in interest rates, which are to some extent attributable to changes in inflation rates or uncertainty concerning changes in inflation rates, do affect the earnings of the Corporation. The Corporation seeks to protect net interest income from the adverse effects of interest rate fluctuations through its asset/liability management program.

The Corporation's management believes that increases in financial institution assets and deposits result in part from monetary inflation. As assets increase, the financial institution must increase equity capital proportionately to maintain appropriate relationships between assets and equity.

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Item 3.  Controls and Procedures

Within 90 days prior to the date of filing this report, an evaluation was performed under the supervision and with the participation of the Corporation's management, including the Chief Executive Officer and the principal financial officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures. Based on that evaluation, the Corporation's management, including the Chief Executive Officer and the principal financial officer, concluded that the Corporation's disclosure controls and procedures were effective as of the time of such evaluation. There have been no significant changes in the Corporation's internal controls or in other factors that could significantly affect internal controls subsequent to the time of such evaluation.

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. |                                                                                                                                                                                                
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                
|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.
|            |                                                                                                                                                                                                
|99.1        | Certification under 18 U.S.C. § 1350. This exhibit is furnished, not filed, in accordance with SEC Release No. 34-47551.                                                                       

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

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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: | May 15, 2003 |                                        
|      |              |                                        
|      |              |                                        
|      |              |                                        
|Date: | May 15, 2003 |                                        
|      |              |                                        

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CERTIFICATIONS

I, Richard L. Edgar, certify that:

1.          I have reviewed this quarterly report on Form 10-QSB of Valley Ridge Financial Corp.;

2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.          The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)          designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)          evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)          presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.          The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)          all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)          any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.          The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

|/s/ Richard L. Edgar                                                                 | 
|------------------------------------------------------------------------------------ | 
|Richard L. Edgar
President and Chief Executive Officer 
Valley Ridge Financial Corp. | 

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I, Michael E. McHugh, certify that:

1.           I have reviewed this quarterly report on Form 10-QSB of Valley Ridge Financial Corp.;

2.          Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.          Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.          The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)          designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)          evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)          presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.          The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)          all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)          any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.          The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: May 15, 2003

|/s/ Michael E. McHugh                                                   | 
|----------------------------------------------------------------------- | 
|Michael E. McHugh
Secretary and Treasurer 
Valley Ridge Financial Corp. | 

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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.
| |             |  |                                                                                                                                                                                                
| | 99.1        |  | Certification under 18 U.S.C. § 1350. This exhibit is furnished, not filed, in accordance with SEC Release No. 34-47551.                                                                       

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