# U.S. 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
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------

|[_] | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION          PERIOD FROM ____________ TO _________
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

# Commission file number
0-27984

Ridgestone Financial
Services, Inc.(Exact name of small business issuer as specified in its charter)

|Wisconsin                       | 39-1797151         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

13925 West North AvenueBrookfield,
Wisconsin 53005 (Address of principal
executive offices)

262-789-1011(Issuers
telephone number)

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

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

|Outstanding as of September 30, 2003
|------------------------------------
|Common Stock, no par value          

Transitional Small Business
Disclosure Format:  Yes ___   No X

---

# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES

# INDEX

|                                                               
|---------------------------------------------------------------
|PART I - FINANCIAL INFORMATION                                 
|Item 1.  Financial Statements                                  
|Consolidated Balance Sheets as of                              
|September 30, 2003 and December 31, 2002                       
|Consolidated Statements of Income                              
|For the Three and Nine Months Ended September 30, 2003 and 2002
|Consolidated Statements of Cash Flows                          
|For the Nine Months Ended September 30, 2003 and 2002          
|Consolidated Statements of Stockholders' Equity                
|For the Nine Months Ended September 30, 2003 and 2002          
|Notes to Consolidated Financial Statements                     
|Item 2.  Management's Discussion and Analysis                  
|Item 3.  Controls and Procedures                               
|PART II - OTHER INFORMATION                                    
|Item 6.  Exhibits and Reports on Form 8-K                      
|SIGNATURES                                                     

---

PART I - FINANCIAL
INFORMATION

Item 1.  Financial
Statements

# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES          CONSOLIDATED BALANCE SHEETS   September 30, 2003
and December 31, 2002

|                                                            
|------------------------------------------------------------
|ASSETS                                                      
|Cash and due from banks                                     
|Federal Funds sold                                          
|                                                            
|Total cash and cash equivalents                             
|                                                            
|Interest bearing deposits in banks                          
|Available for sale securities-stated at fair value          
|                                                            
|                                                            
|                                                            
|Loans receivable                                            
|Less: Allowance for estimated loan losses                   
|                                                            
|Net loans receivable                                        
|                                                            
|Mortgage loans held for sale                                
|Premises and equipment, net                                 
|Cash surrender value of life insurance                      
|Accrued interest receivable and other assets                
|                                                            
|Total Assets                                                
|                                                            
|LIABILITIES AND STOCKHOLDERS' EQUITY                        
|LIABILITIES                                                 
|Deposits:                                                   
|Demand                                                      
|Savings and NOW                                             
|Other Time                                                  
|                                                            
|Total deposits                                              
|                                                            
|Federal funds purchased                                     
|Other borrowings                                            
|Accrued interest payable and other liabilities              
|Guaranteed preferred beneficial interests in the            
|corporation's subordinated debentures                       
|                                                            
|Total Liabilities                                           
|                                                            
|STOCKHOLDERS' EQUITY                                        
|Preferred  stock, no par value, 2,000,000 shares authorized,
|no shares issued                                            
|Common stock, no par value, 10,000,000 shares authorized,   
|879,659 and 877,659 shares issued, respectively             
|Treasury stock, 50,000 and 0 shares at cost, respectively   
|Accumulated deficit                                         
|Accumulated other comprehensive loss                        
|                                                            
|Total Stockholders' Equity                                  
|                                                            
|Total Liabilities and Stockholders' Equity                  
|                                                            

1

---

# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES          CONSOLIDATED STATEMENTS OF INCOME Three and Nine
Months Ended September 30, 2003 and 2002    (Unaudited)

|                                              | Three Months Ended | Nine Months Ended
|--------------------------------------------- | ------------------ | -----------------
|
|Interest income                               |                    |                  
|Interest and fees on loans                    |                    |                  
|Interest on federal funds sold                |                    |                  
|Interest on deposits in banks                 |                    |                  
|                                              |                    |                  
|Total interest income                         |                    |                  
|                                              |                    |                  
|Interest expense                              |                    |                  
|Interest on deposits                          |                    |                  
|Interest on borrowed funds                    |                    |                  
|Interest on preferred securities              |                    |                  
|                                              |                    |                  
|Total interest expense                        |                    |                  
|                                              |                    |                  
|                                              |                    |                  
|Net interest income before provision          |                    |                  
|for loan losses                               |                    |                  
|Provision for loan losses                     |                    |                  
|                                              |                    |                  
|Net interest income after provision           |                    |                  
|for loan losses                               |                    |                  
|Non-interest income                           |                    |                  
|Secondary market loan fees                    |                    |                  
|Gain on sale of other real estate             |                    |                  
|Service charges on deposit accounts           |                    |                  
|Gain on sale of available for sale securities |                    |                  
|Increase in cash surrender value              |                    |                  
|Other income                                  |                    |                  
|                                              |                    |                  
|Total non-interest income                     |                    |                  
|                                              |                    |                  
|                                              |                    |                  
|Non-interest expense                          |                    |                  
|Salaries and employee benefits                |                    |                  
|Occupancy and equipment expense               |                    |                  
|Other expense                                 |                    |                  
|                                              |                    |                  
|Total non-interest expense                    |                    |                  
|                                              |                    |                  
|                                              |                    |                  
|Income before income taxes                    |                    |                  
|                                              |                    |                  
|Provision for income taxes                    |                    |                  
|                                              |                    |                  
|Net income                                    |                    |                  
|                                              |                    |                  
|Earnings per share  -Basic                    |                    |                  
|-Diluted                                      |                    |                  
|Average shares outstanding                    |                    |                  

2

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# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
         Nine Months Ended September 30, 2003 and 2002(Unaudited)

|                                                    | Nine Months Ended
|--------------------------------------------------- | -----------------
|
|Cash flows from operating activities:               |                  
|Net income                                          |                  
|Adjustments to reconcile net income to net cash     |                  
|used in operating activities:                       |                  
|Depreciation                                        |                  
|Gain on sale of available for sale securities       |                  
|Provision for loan losses                           |                  
|Net increase in cash surrender value                |                  
|Net change in:                                      |                  
|Mortgage loans held for sale                        |                  
|Accrued interest receivable and other assets        |                  
|Accrued interest payable and other liabilities      |                  
|                                                    |                  
|Net cash provided by (used in) operating activities |                  
|                                                    |                  
|Cash flows from investing activities:               |                  
|Net increase in interest-bearing deposits           |                  
|Proceeds from sale of available for sale            |                  
|securities                                          |                  
|Purchase of available for sale securities           |                  
|Net increase in loans                               |                  
|Additions to premises and equipment                 |                  
|                                                    |                  
|Net cash used in investing activities               |                  
|                                                    |                  
|Cash flows from financing activities:               |                  
|Net increase in deposits                            |                  
|Net increase (decrease) in borrowed funds           |                  
|Purchase of treasury stock                          |                  
|Proceeds from issuance of common stock              |                  
|Issuance of subordinated debentures                 |                  
|                                                    |                  
|Net cash provided by financing activities           |                  
|                                                    |                  
|Net change in cash and cash equivalents             |                  
|                                                    |                  
|Cash and cash equivalents, beginning                |                  
|                                                    |                  
|Cash and cash equivalents, ending                   |                  
|                                                    |                  
|Supplemental cash flow disclosures                  |                  
|Cash paid for interest                              |                  
|Cash paid for income taxes                          |                  

3

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# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Nine
Months Ended September 30, 2003 and 2002 (Unaudited)

|                                     | Common
Stock | Treasury
Stock | Retained
Earnings | Accumulated
Other
Comprehensive
Income
(Loss) | Total
|------------------------------------ | ------------ | -------------- | ----------------- | --------------------------------------------- | -----
|Balances                             |              |                |                   |                                               |      
|December 31, 2001                    |              |                | $                 | 8,417,117                                     |      
|Net income                           |              |                |                   |                                               |      
|Other comprehensive income-change in |              |               
|net unrealized gain on securities    |              |               
|available for sale, net of tax       |              |                |                   |                                               |      
|                                     |              |                |                   |                                               |      
|Total comprehensive income           |              |                |                   |                                               |      
|                                     |              |                |                   |                                               |      
|Common stock issued                  |              |                |                   | 6,502                                         |      
|                                     |              |                |                   |                                               |      
|Balances                             |              |               
|September 30, 2002                   |              |                | $                 | 8,423,619                                     |      
|                                     |              |                |                   |                                               |      
|Balances                             |              |               
|December 31, 2002                    |              |                | $                 | 8,423,619                                     |      
|Net income                           |              |                |                   |                                               |      
|Other comprehensive incone-change in |              |               
|net unrealized gain on securities    |              |               
|available for sale, net of tax       |              |                |                   |                                               |      
|                                     |              |                |                   |                                               |      
|Total comprehensive income           |              |                |                   |                                               |      
|                                     |              |                |                   |                                               |      
|Common stock issued                  |              |                |                   | 10,000                                        |      
|Treasury Stock                       |              |                |                   |                                               |      
|                                     |              |                |                   |                                               |      
|Balances                             |              |               
|September 30, 2003                   |              |                | $                 | 8,433,619                                     |      
|                                     |              |                |                   |                                               |      

4

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RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSeptember 30,
2003 and 2002(Unaudited)

NOTE 1  BASIS OF
PRESENTATION

The accompanying unaudited
consolidated financial statements of Ridgestone Financial Services, Inc. (the
Company) have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for the fair
presentation have been included. Operating results for the three and nine months ended
September 30, 2003 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2003. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted. The
accounting policies followed by the Company are set forth in Note 1 to the Companys
consolidated financial statements contained in the Companys Annual Report on Form
10-KSB for the year ended December 31, 2002. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Companys
Annual Report on Form 10-KSB for the year ended December 31, 2002.

NOTE 2  PRINCIPLES
OF CONSOLIDATION

The accompanying consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, Ridgestone Bank (the Bank) and Ridgestone Capital Trust I. All
significant intercompany accounts and transactions have been eliminated in the
consolidated financial statements.

The consolidated income of the
Company is principally from the income of the Bank. The Bank grants commercial,
residential and consumer loans and accepts deposits from customers primarily in
southeastern Wisconsin. The Bank is subject to competition from other financial
institutions and non-financial institutions providing financial products. Additionally,
the Company and the Bank are subject to the regulations of certain regulatory agencies and
undergo periodic examination by those regulatory agencies.

NOTE 3  STOCK-BASED
COMPENSATION PLAN

At September 30, 2003, the Company
has a stock-based employee compensation plan. The Company accounts for this plan under the
recognition and measurement principles of APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations. No stock-based employee compensation
cost is reflected in net income, as all options granted under this plan had an exercise
price equal to the approximate market value of the underlying common stock on the date of
grant. The following table illustrates, in accordance with SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure, the effect on net income
and earnings per share if the Company had applied the fair value recognition provisions of
SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.

|                                                   
|---------------------------------------------------
|Net income - as reported                           
|Deduct: Total stock-based employee compensation    
|expense determined under a fair value              
|based method for all awards granted, net of related
|tax effects                                        
|                                                   
|Pro forma net income                               
|                                                   
|Basic earnings per share - as reported             
|Pro forma basic earnings per share                 
|Diluted earnings per share - as reported           
|Pro forma diluted earnings per share               

5

---

# Item 2.
Managements Discussion and Analysis

# General

Ridgestone Financial Services, Inc.
(the Company) was formed in May 1994 under the laws of the State of Wisconsin
for the purpose of becoming the bank holding company of Ridgestone Bank (the
Bank).

The Bank was capitalized on December
6, 1995, and commenced operation on December 7, 1995. The Bank was organized as a
Wisconsin chartered commercial bank with depository accounts insured to the maximum extent
allowable by the Federal Deposit Insurance Corporation. The Bank provides full service
commercial and consumer banking services in Brookfield, Wisconsin, and adjacent
communities.

On June 30, 2003, Ridgestone Capital
Trust I (the Capital Trust), a Delaware business trust wholly owned by the
Company, completed the sale of $1.5 million trust preferred securities (the Trust
Preferred Securities). The Trust Preferred Securities were sold in a private
placement to institutional investors. Capital Trust used the proceeds from the offering to
purchase a like amount of the Companys Junior Subordinated Debentures (the
Debentures). The Debentures are the sole assets of the Capital Trust and are
eliminated, along with the related income statement effects, in the consolidated financial
statements.

The Trust Preferred Securities mature
in 30 years and have a 7.00% fixed rate from June 30, 2003 through June 29, 2008. The rate
resets on June 30, 2008, and every five years thereafter on June 30, to the five year rate
of the LIBOR Swap Curve (as made available on Bloomberg Financial Markets) plus 3.50
percentage points. The distribution rate for the first ten years (until June 29, 2013) may
not exceed 12%. The Trust Preferred Securities may be called in part or in full on June
30, 2008 and quarterly thereafter, with 30 days notice, in a minimum principal amount of
$500,000 and in increments of $10,000 thereafter. The Trust Preferred Securities are
mandatorily redeemable upon the maturity of the Debentures on June 30, 2033 or upon
earlier redemption as provided in the Indenture.

The Company has fully and
unconditionally guaranteed all of the obligations of Capital Trust. The guarantee covers
the quarterly distributions and payments on liquidation or redemption of the Trust
Preferred Securities, but only to the extent of funds held by the Capital Trust. The Trust
Preferred Securities qualify under the risk-based capital guidelines as Tier 1 capital for
regulatory purposes.

Critical Accounting
Policies.In preparing consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.
The Company has identified the determination of the allowance for loan loss reserves and
deferred tax assets as critical accounting policies that require material estimates and
that are particularly susceptible to significant change in the near term.

| | Allowance
for Loan Losses. The allowance for loan losses is determined using a
methodology which reserves currently for those loans in which it is determined that a
loss is probable based on characteristics of the individual loan, historical loss
patterns of similar, homogeneous loans and environmental factors unique to
each measurement date. The allowance for loan losses is determined in accordance with
FASB Statements 5 and 114 and provides for losses that have potentially been incurred as
of the balance sheet date. The allowance is based on past events and current economic
conditions, and does not include the effects of expected losses on specific loans or
groups of loans that are related to future events or expected changes in economic
conditions. The reserving methodology used by the Company has the following components:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Specific
reserve. On a monthly basis, management reviews all past due loans and loans
previously classified in order to classify or reclassify loans requiring attention, or
those with potential losses. Problem loans include credits that have been identified as
having underlying problems based on assessment of the borrowers business or
collateral. Included in this group are those nonaccrual loans that meet the criteria as
being impaired. A loan is considered impaired when, based on current
information and events, it is probable that the Bank will be unable to collect the
scheduled payments of principal and interest when due according to the contractual terms
of the loan agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled principal
and interest payments when due. Impairment is measured on a loan by loan basis for
commercial and construction loans by either the present value of expected future cash
flows discounted at the loans effective interest rate, the loans obtainable
market price, or the fair value of the collateral if the loan is collateral dependent.
Ranges of loss are determined based on best- and worst-case scenarios for each loan.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Reserves
for homogeneous loan pools. The Company makes a significant number of loans which,
due to their underlying similar characteristics, are assessed for loss as homogeneous pools.
The homogeneous pools of loans are made up of commercial, commercial real estate,
residential mortgages and consumer loans. All of the loans included in the homogeneous
pools have been excluded from the specific reserve allocation previously discussed. The
Company allocates the allowance for loan losses to each loan category based on a defined
methodology that has been in use, without material change, for several years. The
methodology is based on historical loss information and regulatory averages.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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| | Actual
loss ratios experienced in the future could vary from those projected. This uncertainty
occurs because other factors affecting the determination of probable losses inherent in
the loan portfolio may exist which are not necessarily captured by the application of
historical loss ratios. To ensure a higher degree of confidence, an unallocated allowance
is also maintained. The unallocated portion of the allowance reflects managements
view that the allowance should have a margin that recognizes the imprecision underlying
the process of estimating expected credit losses. Determination of the probable losses
inherent in the portfolio, which are not necessarily captured by the allocated
methodology discussed above, involves the exercise of judgment. Factors considered in the
evaluation of the adequacy of the Companys unallocated allowance include portfolio
exposure due to concentration in specific industries. While management uses the best
information available to make its evaluation, future adjustments to the allowance may be
necessary if there are significant changes in economic conditions.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Deferred
Taxes. Amounts provided for income tax expense are based on income
reported for financial statement purposes and do not necessarily represent amounts
currently payable under tax laws. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future based on
enacted tax laws and rates applicable to the periods in which the differences are
expected to affect taxable income. As changes in tax laws or rates are enacted, deferred
tax assets and liabilities are adjusted through the provision for income taxes. The
differences relate principally to the allowance for loan losses, deferred compensation,
and net operating loss carryforwards. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following is a discussion of the
Companys Financial Condition and Results of Operations as of and for the three
months and nine months ended September 30, 2003. The discussion provides additional
analysis of the financial statements and should be read in conjunction with that
information.

# Financial Condition

Total Assets.Total assets of the Company as of September 30, 2003 were $91,439,681 compared to
$85,967,021 as of December 31, 2002, an increase of $5,472,660 or 6%. Assets increased
primarily in federal funds sold, interest bearing deposits in banks and available-for-sale
securities.

Cash and Cash Equivalents.Cash and due from banks, which represent cash maintained at the Bank and
funds that the Bank and the Company have deposited in other financial institutions, was
$3,893,557 at September 30, 2003, compared to $4,431,478 as of December 31, 2002. The Bank
reported $4,801,000 of federal funds sold (which are inter-bank funds with daily
liquidity) on September 30, 2003. There were no federal funds sold as of December 31,
2002. The increase in federal funds sold was primarily due to growth in deposits.

7

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Interest Bearing Deposits.Total interest bearing deposits in banks as of September 30, 2003 were
$549,719 compared to $87,427 as of December 31, 2002, an increase of $462,292, primarily
due to the proceeds from the Companys issuance of the Debentures on June 30, 2003.

Available for Sale Securities.The Companys investment portfolio currently consists of securities
placed in the available-for-sale category which may be liquidated to provide cash for
operating or financing purposes. The available-for-sale securities portfolio increased to
$949,700 at September 30, 2003 from $138,460 at December 31, 2002. The increase from the
prior period was primarily the result of investing a portion of the proceeds from the
Companys issuance of the Debentures on June 30, 2003.

Loans.              Loans
increased by $1,556,082, or 2%, as total loans prior to the allowance for           loan
losses grew from $73,986,943 as of December 31, 2002 to $75,543,025 as of
          September 30, 2003. Higher mortgage loan rates resulted in fewer opportunities
          for refinancing mortgages in the long-term, fixed rate market, resulting in a
          $1,741,771 decrease in mortgage loans held for sale, from $2,160,021 at
December           31, 2002 to $418,250 at September 30, 2003. These loans represent
loans           originated with the intent to be sold in the secondary loan market. The
Bank has           secondary market sales commitments for these loans mitigating interest
rate risk           on loans held for sale.

At September 30, 2003, the mix of the
loan portfolio included Commercial loans of $34,602,346 or 46% of total loans; Commercial
Real Estate loans of $19,802,867 or 26% of total loans; Residential Real Estate loans of
$20,539,276 or 27% of total loans; and Consumer loans of $598,536 or 1% of total loans.

At December 31, 2002, the mix of the
loan portfolio included Commercial loans of $33,532,942 or 45% of total loans; Commercial
Real Estate loans of $25,831,597 or 35% of total loans; Residential Real Estate loans of
$13,783,616 or 19% of total loans; and Consumer loans of $838,788 or 1% of total loans.

Allowance for Loan Losses.Based on the loss estimates described in General  Critical
Accounting Policies  Allowance for Loan Losses, management determines its best
estimate of the required allowance for loan losses. Managements evaluation of these
factors resulted in an allowance for loan losses of $688,833 or 0.91% of gross loans at
September 30, 2003 compared to $736,118 or 0.99% of gross loans at December 31, 2002.

The resulting provisions for loan
losses are the amounts required to maintain the allowance for loan losses at levels deemed
necessary by management after taking into consideration charge-offs and recoveries. The
provisions for loan losses for the nine months ended September 30, 2003 and 2002 were
$348,000 and $125,000, respectively. During the three months ended September 30, 2003, the
Bank incurred $395,000 in charge-offs related to two failed business loans compared to no
charge-offs during the same period in 2002. During the nine months ended September 30,
2003, the Bank incurred $395,962 in charge-offs compared to charge-offs of $70,684 for the
same period in 2002. Management recognizes there are significant estimates in the process
and the ultimate losses could be significantly different from those currently estimated.
For additional information regarding the Companys allowance for loan losses, see
Results of Operations  Provision for Loan Losses below.

Deposits. Deposits
as of September 30, 2003 were $76,013,054 compared to           $71,185,940 as of
December 31, 2002, an increase of $4,827,114 or 7%, with the           majority of growth
in other time deposits.

Borrowed Funds.
In November 2000, the Bank became a member of the Federal Home Loan Bank (the
FHLB). As a member, the Bank has the capacity to borrow funds from the FHLB up
to a predetermined amount based on the amount of certain types of loans carried by the
Bank. To fund loan demand, the Bank borrowed $4,500,000 from the FHLB during fiscal 2002,
with applicable interest rates ranging from 3.61% to 3.99% and with varying maturities
through May 2004.

On December 31, 2002 the Bank also
borrowed $1,112,000 in federal funds purchased, which are inter-bank funds with daily
maturities. There were no federal funds purchased as of September 30, 2003.

8

---

Liquidity.For
banks, liquidity generally represents the ability to meet withdrawals           from
deposits and the funding of loans. The assets that provide liquidity are           cash,
federal funds sold and securities. Further, subject to certain limits, the
          Company has the ability to acquire additional funds through short-term
          borrowings from other financial institutions. Liquidity needs are influenced by
          economic conditions, interest rates and competition. The loan-to-deposit ratio
          prior to the allowance for loan losses as of September 30, 2003 was 99%
compared           to 104% as of December 31, 2002. The funds needed to meet the increase
in loan           growth during the first nine months of 2003 came primarily from deposit
growth.           Management continues to place emphasis on generating deposits in the
local           community to keep pace with increasing loan demand.

Net cash provided by operating
activities for the nine months ended September 30, 2003 was $2,853,335 compared to
$897,939 used in operations in the prior period, primarily due to a decrease in mortgage
loans held for sale at September 30, 2003, as a result of higher mortgage loan rates. Net
cash used in investing activities for the nine months ended September 30, 2003 was
$3,322,355 compared to $13,401,245 in the prior period, due primarily to slower loan
growth.

On July 23, 2003, during the
Companys third fiscal quarter, the Company announced that its Board of Directors
authorized the repurchase of up to 50,000 shares of its outstanding common stock. As of
August 1, 2003, the Company had repurchased 50,000 shares at a weighted average purchase
price of $9.86 per share. The Company currently has no further authorization to repurchase
additional shares.

Off-Balance Sheet
Liabilities.The Company is party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, commitments under credit
card arrangements, commercial letters of credit and standby letters of credit. These
financial instruments are recorded in the financial statements when they are funded or
related fees are incurred or received.

As of September 30, 2003, the Company
had $18,074,461 in financial instruments with off-balance sheet risk compared to
$19,400,871 as of December 31, 2002.

Asset/Liability Management.Closely related to liquidity management is the management of
interest-earning assets and interest-bearing liabilities. The Company manages its rate
sensitivity position to avoid wide swings in net interest margins and to minimize risk due
to changes in interest rates.

Changes in net interest income, other
than volume related changes, arise when interest rates on assets reprice in a time frame
or interest rate environment that is different from the repricing period for liabilities.
Changes in net interest income also arise from changes in the mix of interest-earning
assets and interest-bearing liabilities.

9

---

Capital Resources.  Capital ratios
applicable to the Bank and the Company as of September 30, 2003 and December 31, 2002
were as follows:

|                                   
|-----------------------------------
|Amount                             
|As of September 30, 2003           
|Total capital (to risk weighted    
|assets)                            
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    
|Tier 1 capital (to risk weighted   
|assets)                            
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    
|Tier 1 capital (to average assets) 
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    
|As of December 31, 2002            
|Total capital (to risk weighted    
|assets)                            
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    
|Tier 1 capital (to risk weighted   
|assets)                            
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    
|Tier 1 capital (to average assets) 
|Ridgestone Financial Services, Inc.
|Ridgestone Bank                    

Management intends to maintain
capital levels in excess of minimums established by the regulatory authorities. The Bank
was categorized as well capitalized under the regulatory framework for capital
adequacy as of September 30, 2003 and December 31, 2002.

# Results of Operations

Net Income. For
the three months ended September 30, 2003, the Company reported net income of $158,119, an
increase of $13,130 or 9% compared to net income of $144,989 for the three months ended
September 30, 2002. Net income was $574,667 for the nine months ended September 30, 2003
as compared to net income of $335,292 for the same period in 2002, an increase of $239,375
or 71%. The increase for the three and nine months ended September 30, 2003 is attributed
primarily to increased loan volume, lower interest expense and increases in non-interest
income from fees related to long-term mortgage loans sold in the secondary market.

Net Interest
Income. Total interest income increased by $34,737 to $1,219,956 for the
three months ended September 30, 2003 and increased by $402,632 to $3,763,405 for the nine
months ended September 30, 2003 as compared with the same periods respectively in 2002.
Total interest expense decreased by $42,805 to $361,588 for the three months ended
September 30, 2003 and decreased by $135,339 to $1,091,229 for the nine months ended
September 30, 2003 as compared with the same periods respectively in 2002.

Net interest income before provision
for loan losses for the three months ended September 30, 2003 was $858,368 compared to
$780,826 for the same period in 2002, an increase of $77,542 or 10%. The increase is due
to increased loan volume and lower interest expense. For the three months ended September
30, 2003, the Companys net interest margin declined to 4.16% compared to 4.42% for
the same period in 2002, primarily due to a lower yield on earning assets. Net interest
income before loan loss provision for the nine months ended September 30, 2003 was
$2,672,176 compared to $2,134,205 for the same period last year, an increase of $537,971
or 25%. The increase is primarily due to increased loan volume. For the nine months ended
September 30, 2003, the Companys net interest margin improved to 4.44% compared to
4.15% for the same period in 2002, primarily due to a decrease in deposit interest rates.

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Provision for Loan
Losses.The allowance for loan losses is established as losses are
estimated to have occurred through a provision for loan losses charged to earnings. Loan
losses are charged against the allowance when management believes the collectibility of a
loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance.
The allowance for loan losses is adequate to cover probable credit losses relating to
specifically identified loans, as well as probable credit losses inherent in the balances
of the loan portfolio. In accordance with FASB Statements 5 and 114, the allowance is
provided for losses that have been incurred as of the balance sheet date and is based on
past events and current economic conditions, and does not include the effects of expected
losses on specific loans or groups of loans that are related to future events or expected
changes in economic conditions. See General  Critical Accounting Policies
 Allowance for Loan Losses for additional factors used in determining the loan
loss reserve and provision for loan losses.

The Company made a provision for loan
losses of $348,000 during the first nine months of 2003 compared with a provision of
$125,000 during the same period in 2002. During the three months ended September 30, 2003,
the Bank incurred $395,000 in charge-offs related to two failed business loans compared to
no charge-offs during the same period in 2002. The provision was made to bring the
allowance to the amount determined necessary by management based on the analysis
performed.

Non-Interest
Income. Total non-interest income was $299,448 for the three months ended
September 30, 2003 compared to $163,420 for the same period in 2002, an increase of
$136,028 or 83%. Total non-interest income was $776,437 for the nine months ended
September 30, 2003 compared to $399,871 for the same period in 2002, an increase of
$376,566 or 94%. The increase in non-interest income for the three and nine months ended
September 30, 2003 is primarily due to greater fee income related to long-term mortgage
loans sold in the secondary market.

Non-Interest Expense.Total
non-interest expenses were $644,896 for the three months ended September 30, 2003
compared to $659,886 for the same period in 2002, a decrease of $14,990 or 2%. Due to
lower than expected earnings resulting from managements decision to increase the
provision for loan losses following the charge-offs in the third quarter of 2003, the
Company reversed certain accrued expenses related primarily to employee incentives. Lower
occupancy and equipment expenses also contributed to the decline. Total non-interest
expenses were $2,214,122 for the nine months ended September 30, 2003 compared to
$1,914,209 for the same period in 2002, an increase of $299,913 or 16%. The increase in
non-interest expenses for the nine months ended September 30, 2003 is attributed to legal
and accounting costs related to compliance with new legislation of approximately $65,000,
along with increases in various other operating expenses.

# Special Note Regarding
Forward-Looking Statements

Certain matters discussed in this
Quarterly Report on Form 10-QSB are forward-looking statements intended to
qualify for the safe harbors from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements can generally be
identified as such because the context of the statement will include words such as the
Company believes, anticipates, expects, or other words
of similar import. Similarly, statements that describe the Companys future plans,
objectives, or goals are also forward-looking statements. Such forward-looking statements
are subject to certain risks and uncertainties which could cause actual results to differ
materially from those contemplated in the forward-looking statements. Such risks include,
among others: interest rate trends, the general economic climate in the Companys
market area, loan delinquency rates, and legislative enactments or regulatory changes
which adversely affect the business of the Company and/or the Bank. Shareholders,
potential investors and other readers are urged to consider these factors in evaluating
the forward-looking statements. The forward-looking statements included herein are only
made as of the date of this Form 10-QSB and the Company undertakes no obligation to
publicly update such forward-looking statements to reflect subsequent events or
circumstances.

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# Item 3. Controls and
Procedures

The Company carried out an
evaluation, under the supervision and with the participation of the Chairman of the Board,
President and Chief Executive Officer of the Company and the Senior Vice President and
Treasurer of the Company, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures, as defined in Exchange Act Rules
13a-14(c) and 15d-14(c), as of the end of the period covered by this Quarterly Report on
Form 10-QSB. Based on that evaluation, they concluded that the Companys disclosure
controls and procedures are effective to ensure that information required to be disclosed
in the Companys Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commissions rules
and forms, and that such information is accumulated and communicated to them to allow
timely decisions regarding required disclosure.

There has been no change in the
Companys internal control over financial reporting that occurred during the
Companys last fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Companys internal control over financial reporting.

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# PART II  OTHER
INFORMATION

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

| | a. | Exhibits
| | -- | --------

| | 31.1 | Certification
by Paul E. Menzel (Chairman of the Board, President and Chief Executive Officer) pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
by William R. Hayes (Senior Vice President and Treasurer) pursuant to
                           Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 32 | Certification
by Paul E. Menzel (Chairman of the Board, President and Chief Executive
                           Officer) and William R. Hayes (Senior Vice President and
Treasurer) pursuant to                            Section 906 of the Sarbanes-Oxley Act
of 2002.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. | Reports
on Form 8-K
| | -- | -------------------

| | The
Company did not file a Current Report on Form 8-K during the quarter ended September 30,
2003. The Company furnished the following Current Reports on Form 8-K during the quarter
ended September 30, 2003:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date of Report | Date Furnished | Items                                                                                                                                                                                                         
|-------------- | -------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|July 22, 2003  | July 23, 2003  | Item 9 (furnished under Item 12), including
Consolidated Balance Sheets at June 30, 2003 and
December 31, 2002 and Consolidated Statements of
Income for the three and six months ended June 30, 2003 and 2002

13

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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.

|                       
|-----------------------
|Date: November 13, 2003
|Date: November 13, 2003

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