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, 2003

OR

[  ] TRANSITION REPORT UNDER 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 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 958,597 shares of Common Stock (no par value) outstanding as of November 12, 2003.

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

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VALLEY RIDGE FINANCIAL CORP.
INDEX

|PART I.    | FINANCIAL INFORMATION                                                                                                                                                      | Page No.
|---------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|           |                                                                                                                                                                            |         
|           | Item 1.   Financial Statements                                                                                                                                             |         
|           |                                                                                                                                                                            |         
|           | Condensed Consolidated Balance Sheets -
   September 30, 2003 (Unaudited) and December 31, 2002                                                                            | 3       
|           |                                                                                                                                                                            |         
|           | Condensed Consolidated Statements of Income and Comprehensive
   Income - Three and Nine Months Ended September 30, 2003
   (Unaudited) and September 30, 2002 (Unaudited) | 4       
|           |                                                                                                                                                                            |         
|           | Condensed Consolidated Statements of Cash Flows -
   Nine Months Ended September 30, 2003 (Unaudited) and
   September 30, 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 | 13                                                                                                                                                                        

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VALLEY RIDGE FINANCIAL CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS

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|                                                   | September 30,2003
(Unaudited) |             | December 31,2002 |  
|-------------------------------------------------- | ----------------------------- | ----------- | ---------------- | -
|ASSETS                                             |                               |             |                  |  
|Cash and due from banks                            | $                             | 6,742,349   |                  | $
|Federal funds sold                                 |                               | 14,000,000  |                  |  
|Cash and cash equivalents                          |                               | 20,742,349  |                  |  
|                                                   |                               |             |                  |  
|Securities available for sale                      |                               | 41,656,151  |                  |  
|Other securities                                   |                               | 1,593,428   |                  |  
|Loans held for sale                                |                               | 545,600     |                  |  
|                                                   |                               |             |                  |  
|Loans                                              |                               | 122,748,431 |                  |  
|Allowance for loan losses                          |                               | (1,748,363  | )                |  
|                                                   |                               | 121,000,068 |                  |  
|                                                   |                               |             |                  |  
|Premises and equipment, net                        |                               | 4,903,543   |                  |  
|Cash surrender value of life insurance policies    |                               | 4,161,642   |                  |  
|Accrued interest receivable                        |                               | 915,337     |                  |  
|Other assets                                       |                               | 1,541,694   |                  |  
|                                                   |                               |             |                  |  
|Total assets                                       | $                             | 197,059,812 |                  | $
|                                                   |                               |             |                  |  
|LIABILITIES AND SHAREHOLDERS' EQUITY               |                               |             |                  |  
|Deposits                                           |                               |             |                  |  
|Noninterest-bearing                                | $                             | 26,684,108  |                  | $
|Interest-bearing                                   |                               | 122,864,214 |                  |  
|Total                                              |                               | 149,548,322 |                  |  
|                                                   |                               |             |                  |  
|                                                   |                               |             |                  |  
|Securities sold under agreement to repurchase      |                               | 5,411,043   |                  |  
|Federal Home Loan Bank advances                    |                               | 19,500,000  |                  |  
|Accrued expenses and other liabilities             |                               | 2,568,551   |                  |  
|Total liabilities                                  |                               | 177,027,916 |                  |  
|                                                   |                               |             |                  |  
|Shareholders' equity                               |                               |             |                  |  
|Common stock, no par value: 2,000,000 shares       |                               |             |                  |  
|authorized; 958,597 and 954,384 shares outstanding |                               |             |                  |  
|at September 30, 2003 and December 31, 2002        |                               | 8,282,987   |                  |  
|Retained earnings                                  |                               | 11,580,615  |                  |  
|Unearned restricted stock                          |                               | (151,880    | )                |  
|Accumulated other comprehensive income             |                               | 320,174     |                  |  
|Total shareholders' equity                         |                               | 20,031,896  |                  |  
|                                                   |                               |             |                  |  
|Total liabilities and shareholders' equity         | $                             | 197,059,812 |                  | $

See accompanying notes to condensed consolidated financial statements.

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

---

|                                                    | Three Months Ended
September 30, |           | Nine Months Ended
September 30,
|--------------------------------------------------- | -------------------------------- | --------- | -------------------------------
|                                                    | 2003                             |           | 2002                           
|Interest income                                     |                                  |           |                                
|Loans, including fees                               | $                                | 2,165,487 |                                
|Securities                                          |                                  | 319,989   |                                
|Federal funds sold                                  |                                  | 28,541    |                                
|                                                    |                                  | 2,514,017 |                                
|Interest expense                                    |                                  |           |                                
|Deposits                                            |                                  | 688,774   |                                
|Other                                               |                                  | 253,563   |                                
|                                                    |                                  | 942,337   |                                
|                                                    |                                  |           |                                
|Net interest income                                 |                                  | 1,571,680 |                                
|                                                    |                                  |           |                                
|Provision for loan losses                           |                                  | 45,000    |                                
|                                                    |                                  |           |                                
|Net interest income after provision for loan losses |                                  | 1,526,680 |                                
|                                                    |                                  |           |                                
|Noninterest income                                  |                                  |           |                                
|Service charges                                     |                                  | 387,324   |                                
|Net gain on sales of securities                     |                                  | 12,393    |                                
|Net gain on sales of loans                          |                                  | 458,422   |                                
|Income earned on life insurance policies            |                                  | 51,000    |                                
|Other income                                        |                                  | 324,977   |                                
|Total noninterest income                            |                                  | 1,234,116 |                                
|                                                    |                                  |           |                                
|Noninterest expense                                 |                                  |           |                                
|Salaries and benefits                               |                                  | 973,470   |                                
|Occupancy                                           |                                  | 157,427   |                                
|Furniture and fixtures                              |                                  | 152,293   |                                
|Other expense                                       |                                  | 787,021   |                                
|Total noninterest expense                           |                                  | 2,070,211 |                                
|                                                    |                                  |           |                                
|Income before federal income tax                    |                                  | 690,585   |                                
|                                                    |                                  |           |                                
|Federal income tax expense                          |                                  | 173,672   |                                
|                                                    |                                  |           |                                
|Net income                                          | $                                | 516,913   |                                
|Comprehensive income                                | $                                | 78,594    |                                
|                                                    |                                  |           |                                
|Basic earnings per share                            | $                                | .54       |                                
|Diluted earnings per share                          | $                                | .54       |                                

See accompanying notes to condensed consolidated financial statements.

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

---

|                                                           | Nine Months Ended
September 30, |            
|---------------------------------------------------------- | ------------------------------- | -----------
|                                                           | 2003                            |            
|Cash flows from operating activities                       |                                 |            
|Net income                                                 | $                               | 1,568,055  
|Adjustments to reconcile net income                        |                                 |            
|to net cash from operating activities                      |                                 |            
|Depreciation and amortization                              |                                 | 397,793    
|Amortization of premiums and discounts on securities, net  |                                 | 385,899    
|Provision for loan losses                                  |                                 | 135,000    
|Net gains on sales of securities                           |                                 | (47,337    
|Net gains on sales of loans                                |                                 | (1,176,197 
|Loans originated for sale                                  |                                 | (50,154,280
|Proceeds from loans sold                                   |                                 | 51,401,514 
|Net change in:                                             |                                 |            
|Accrued interest receivable and other assets               |                                 | (968,209   
|Accrued expenses and other liabilities                     |                                 | 161,855    
|Net cash from operating activities                         |                                 | 1,704,093  
|                                                           |                                 |            
|Cash flows from investing activities                       |                                 |            
|Loan originations and payments, net                        |                                 | (61,629    
|Proceeds from:                                             |                                 |            
|Sales of securities available for sale                     |                                 | 5,088,275  
|Repayments and maturities of securities available for sale |                                 | 24,720,826 
|Purchase of:                                               |                                 |            
|FHLB stock                                                 |                                 | (32,200    
|Premises and equipment                                     |                                 | (200,420   
|Securities available for sale                              |                                 | (29,840,064
|Net cash used in investing activities                      |                                 | (325,212   
|                                                           |                                 |            
|Cash flows from financing activities                       |                                 |            
|Net increase in deposits                                   |                                 | 9,219,057  
|Repayments of Federal Home Loan Bank advances              |                                 | (2,500,000 
|Net decrease in federal funds purchased                    |                                 |            
|Net increase in securities sold under agreement            |                                 |            
|to repurchase                                              |                                 | 327,682    
|Stock options exercised                                    |                                 | 82,155     
|Dividends paid                                             |                                 | (574,311   
|Net cash from financing activities                         |                                 | 6,554,583  
|                                                           |                                 |            
|Net change in cash and cash equivalents                    |                                 | 7,933,464  
|                                                           |                                 |            
|Cash and cash equivalents at beginning of period           |                                 | 12,808,885 
|                                                           |                                 |            
|Cash and cash equivalents at end of period                 | $                               | 20,742,349 

See accompanying notes to condensed consolidated financial statements.

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

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|1. | BASIS OF PRESENTATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The unaudited financial statements as of September 30, 2003 and for the three and nine months ended September 30, 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 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 periods ended September 30, 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. | 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. Earnings per share amounts are based on 958,171 and 952,138 shares outstanding for the three months ended September 30, 2003 and 2002, respectively. Earnings per share amounts are based on 956,741 and 950,703 shares outstanding for the nine months ended September 30, 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3. | 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 September 30, 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 September 30, 2003 and 2002, using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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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 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. 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 laws and 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, the war on terrorism and events 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 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 $516,913 or $.54 per basic and diluted share for the third quarter of 2003 compared to $507,582 or $.54 per basic share and $.53 per diluted share for the third quarter of 2002. Year-to-date net income was $1,568,055 or $1.64 per basic an diluted share for 2003 compared to $1,489,695 or $1.57 per basic share and $1.56 per diluted share for 2002. The improvement in net income during both time periods is primarily the result of higher noninterest income, due to increased gains on sales of mortgage loans, offset partially by a decrease in net interest income.

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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.

|                          | Nine Months Ended September 30,                    |            
|------------------------- | -------------------------------------------------- | -----------
|                          | -------------------------2 0 0 3------------------ |            
|                          | AverageBalance                                     |            
|                          |                                                    |            
|Taxable securities        | $                                                  | 32,662,084 
|Tax exempt securities(3)  |                                                    | 10,280,538 
|Loans (1) (2) (3)         |                                                    | 122,374,309
|Federal funds sold        |                                                    | 10,760,071 
|Total earning assets      |                                                    | 176,077,002
|                          |                                                    |            
|Nonaccrual loans          |                                                    | 288,305    
|                          |                                                    |            
|Less allowance for        |                                                    |            
|loan losses               |                                                    | (1,752,214 
|Cash and due from banks   |                                                    | 6,572,829  
|Other nonearning assets   |                                                    | 10,163,341 
|                          |                                                    |            
|Total assets              | $                                                  | 191,349,263
|                          |                                                    |            
|Interest-bearing deposits | $                                                  | 118,863,988
|Other borrowings          |                                                    | 25,520,080 
|Total interest-bearing    |                                                    |            
|liabilities               |                                                    | 144,384,068
|                          |                                                    |            
|Demand deposits           |                                                    | 26,264,256 
|Other liabilities         |                                                    | 661,386    
|Total liabilities         |                                                    | 171,309,710
|Average equity            |                                                    | 20,039,553 
|                          |                                                    |            
|Total liabilities and     |                                                    |            
|equity                    | $                                                  | 191,349,263
|                          |                                                    |            
|Net interest income       |                                                    |            
|Rate spread               |                                                    |            
|Net interest margin       |                                                    |            

|(1) | Average outstanding balances exclude non-accruing loans.                                       
|--- | -----------------------------------------------------------------------------------------------
|(2) | Includes loans held for sale.                                                                  
|(3) | Yields reflected have been computed on a tax-equivalent basis using a marginal tax rate of 34%.

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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.

|                                        |   | For the Nine Months ended                 |  
|--------------------------------------- | - | ----------------------------------------- | -
|                                        |   | --------------2003 over 2002------------- |  
|                                        |   | Total                                     |  
|Increase (decrease) in interest income  |   |                                           |  
|Taxable securities                      | $ | (75,469                                   | )
|Tax-exempt securities                   |   | 14,605                                    |  
|Loans                                   |   | (518,148                                  | )
|Federal funds sold                      |   | (802                                      | )
|Net change in tax-equivalent income     |   | (579,814                                  | )
|                                        |   |                                           |  
|Increase (decrease) in interest expense |   |                                           |  
|Interest-bearing deposits               |   | (18,079                                   | )
|Other borrowings                        |   | (52,115                                   | )
|Net change in interest expense          |   | (70,194                                   | )
|                                        |   |                                           |  
|Net change in net interest income       |   |                                           |  
|(tax equivalent)                        | $ | (509,620                                  | )

Net Interest Income: Net interest income decreased approximately $509,000 or 8.8% for the nine-month period ended September 30, 2003, and approximately $404,000 or 20.5% to $1,571,680 for the three-month period ended September 30, 2003 compared to the same periods in 2002. The decrease in net interest income is primarily attributable to a decrease in the Corporation's yield earned on interest earning assets which was only partially offset by the reduction in cost of funding compared to the prior year.

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 at $135,000 for the nine months ended September 30, 2003 and $45,000 for the three months ended September 30, 2003. Net charge-offs were approximately $90,000 for the third quarter of 2003 compared to net charge-offs of $10,000 for the same period in 2002. Net charge-offs year-to-date were approximately $19,000 as of September 30, 2003 compared to net recoveries of $23,000 for the same period in 2002. 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.

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|                                                       |   | As of and for the Nine
Months Ended September 30, |  
|------------------------------------------------------ | - | ------------------------------------------------- | -
|                                                       |   | 2003                                              |  
|                                                       |   |                                                   |  
|Balance at beginning of period                         | $ | 1,631,977                                         |  
|Provision for loan losses                              |   | 135,000                                           |  
|                                                       |   |                                                   |  
|Recoveries on loans charged-off                        |   | 186,651                                           |  
|Loans charged-off                                      |   | (205,265                                          | )
|Net (charge-offs) recoveries                           |   | (18,614                                           | )
|                                                       |   |                                                   |  
|Balance at end of period                               | $ | 1,748,363                                         |  
|                                                       |   |                                                   |  
|Allowance for loan losses as a percentage of           |   |                                                   |  
|total loans at end of period                           |   | 1.42%                                             |  
|Ratio of net charge-offs (recoveries) to average total |   |                                                   |  
|loans outstanding during the period                    |   | .0002                                             |  

Noninterest Income: Noninterest income for the three months ended September 30, 2003 was approximately $1,234,000 as compared to approximately $699,000 for the same period in 2002. Noninterest income for the nine months ended September 30, 2003 increased to approximately $3,014,000 from approximately $1,953,000 at September 30, 2002. The changes during both periods can be attributed to increased deposit service charges, reflective of deposit growth experienced during 2003, as well an increase in net gains on sales of mortgage loans in the secondary market.

Noninterest Expense: Noninterest expense increased to approximately $2.1 million and $6.1 million for the three and nine months ended September 30, 2003 compared to approximately $1.9 million and $5.6 million for the same periods in 2002. Salaries and benefits increased 3.3% from approximately $943,000 for the three months ended September 30, 2002 to $973,000 for the same period in 2003, and increased 6.9% from approximately $2,839,000 for the nine months ended September 30, 2002 to $3,034,000 for the same period in 2003. The increase in salaries and benefits reflects annual salary increases and additional employees.

Financial Condition, Liquidity, and Capital Resources:

Total assets increased 4.1% or $7.8 million to approximately $197.1 million at September 30, 2003 compared to approximately $189.3 million at December 31, 2002. Total liabilities increased 4.1% or $7.0 million to approximately $177.0 million at September 30, 2003 compared to approximately $170.0 million at December 31, 2002. Total shareholders' equity increased by approximately $780,000 to $20.0 million at September 30, 2003. The increase in shareholders' equity is primarily related to the retention of earnings offset by dividend payouts and a decrease in the unrealized gain on securities available for sale.

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Total loans increased approximately $43,000 or .1% to approximately $122.7 million at September 30, 2003. Deposits increased approximately $9.2 million or 6.6% to approximately $149.5 million at September 30, 2003. The overall impact of these two changes was a decrease in the net loan to deposit ratio to 81% at September 30, 2003 from 86% at December 31, 2002. The allowance for loan losses increased approximately $116,000 during the first nine months of 2003, increasing the reserve of 1.33% of outstanding loans at December 31, 2002 to 1.42% at September 30, 2003.

The Corporation paid dividends of $574,311 during the nine months ended September 30, 2003, compared to $570,539 paid during the same period in 2002.

Shareholders' equity as a percent of total assets was 10.2% at September 30, 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 and cash equivalents and investment securities totaled $64.0 million and $55.9 million at September 30, 2003 and December 31, 2002, or 32.5% and 47.0% of total assets, respectively. 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 Bank has pledged certain investment securities, which are held in safekeeping, as collateral against these borrowings. Repurchase agreements totaled $5.4 million and $5.1 million at September 30, 2003 and December 31, 2002, respectively.

The Corporation had $19.5 million and $22.0 million in advances from the Federal Home Loan Bank at September 30, 2003 and December 31, 2002, respectively. 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

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 and as of the time of 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 end of the period covered by this report. There was no change in the Corporation's internal control over financial reporting that occurred during the three months ended September 30, 2003 that has materially affected, or that is reasonably likely to materially affect, the Corporation's internal control over financial reporting.

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.
| |             |  |                                                                                                                                                                                                
| | 31.1        |  | Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| |             |  |                                                                                                                                                                                                
| | 31.2        |  | Certification of Secretary and Treasurer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| |             |  |                                                                                                                                                                                                
| | 32.1        |  | Certification under 18 U.S.C. § 1350.                                                                                                                                                          

(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: | November 13, 2003 |                                        
|      |                   |                                        
|      |                   |                                        
|      |                   |                                        
|Date: | November 13, 2003 |                                        
|      |                   |                                        

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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.
| |             |  |                                                                                                                                                                                                
| | 31.1        |  | Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| |             |  |                                                                                                                                                                                                
| | 31.2        |  | Certification of Secretary and Treasurer under Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                  
| |             |  |                                                                                                                                                                                                
| | 32.1        |  | Certification under 18 U.S.C. § 1350.