# 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 MARCH 31, 2004
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|[   ] | 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 Avenue                 
|----------------------------------------
|Brookfield, 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.

|Class                      | Outstanding as of March 31, 2004
|-------------------------- | --------------------------------
|Common Stock, no par value | 852,574                         

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                 
|March 31, 2004 and December 31, 2003              
|Consolidated Statements of Income                 
|For the Three Months Ended March 31, 2004 and 2003
|Consolidated Statements of Cash Flows             
|For the Three Months Ended March 31, 2004 and 2003
|Consolidated Statements of Stockholders' Equity   
|For the Three Months Ended March 31, 2004 and 2003
|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    March 31, 2004 and
December 31, 2003

|                                                             | March 31,
2004
(Unaudited) | December 31,
2003
|------------------------------------------------------------ | -------------------------- | -----------------
|ASSETS                                                       |                            |                  
|Cash and due from banks                                      |                            |                  
|Federal Funds sold                                           |                            |                  
|Short-term investments                                       |                            |                  
|                                                             |                            |                  
|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                                               |                            |                  
|                                                             |                            |                  
|                                                             |                            |                  
|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;    |                            |                  
|902,574 and 897,241 shares issued, respectively              |                            |                  
|Treasury stock, 50,000 shares                                |                            |                  
|Accumulated deficit                                          |                            |                  
|Accumulated other comprehensive income (loss)                |                            |                  
|                                                             |                            |                  
|Total Stockholders' Equity                                   |                            |                  
|                                                             |                            |                  
|Total Liabilities and Stockholders' Equity                   |                            |                  
|                                                             |                            |                  

1

---

# RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES      CONSOLIDATED STATEMENTS OF INCOME Three Months Ended
March 31, 2004 and 2003   (unaudited)

|                                     | Three Months Ended
|------------------------------------ | ------------------
|
|Interest income                      |                   
|Loans, including fees                |                   
|Federal funds sold                   |                   
|Securities                           |                   
|Deposits in banks                    |                   
|                                     |                   
|Total interest income                |                   
|                                     |                   
|Interest expense                     |                   
|Deposits                             |                   
|Borrowed funds                       |                   
|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  |                   
|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 SUBSIDIARIES                 CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2004 and 2003   (Unaudited)

|                                                     | Three Months Ended
|---------------------------------------------------- | ------------------
|
|Cash flows from operating activities:                |                   
|Net income                                           |                   
|Adjustments to reconcile net income to net cash      |                   
|used in operating activities:                        |                   
|Depreciation                                         |                   
|Provision for loan losses                            |                   
|Dividend FHLB                                        |                   
|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       |                   
|                                                     |                   
|Total Adjustments                                    |                   
|                                                     |                   
|Net cash used in operating activities                |                   
|                                                     |                   
|                                                     |                   
|Cash flows from investing activities:                |                   
|Net (increase) decrease in interest-bearing deposits |                   
|Purchase of FHLB stock                               |                   
|Net (increase) decrease in loans                     |                   
|Additions to premises and equipment                  |                   
|                                                     |                   
|Net cash provided by (used in) investing activities  |                   
|                                                     |                   
|Cash flows from financing activities:                |                   
|Net increase in deposits                             |                   
|Net increase (decrease) in borrowed funds            |                   
|Proceeds from issuance of common stock               |                   
|                                                     |                   
|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

---

# RIDGESTONE FINANCIAL
SERVICES, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Three
Months Ended March 31, 2004 and 2003   (Unaudited)

|                                                             | Common
Stock | Treasury
Stock | Retained
Earnings | Accumulated
Other
Comprehensive
Income
(Loss) | Total
|------------------------------------------------------------ | ------------ | -------------- | ----------------- | --------------------------------------------- | -----
|Balances                                                     |              |                |                   |                                               |      
|December 31, 2002                                            |              |                | $                 | 8,423,619                                     |      
|Net income                                                   |              |                |                   |                                               |      
|Other comprehensive income-change in net                     |              |               
|unrealized gain on securities available for sale, net of tax |              |                |                   |                                               |      
|                                                             |              |                |                   |                                               |      
|Total comprehensive income                                   |              |                |                   |                                               |      
|                                                             |              |                |                   |                                               |      
|Common stock issued                                          |              |                |                   | 0                                             |      
|                                                             |              |                |                   |                                               |      
|Balances                                                     |              |               
|March 31, 2003                                               |              |                | $                 | 8,423,619                                     |      
|                                                             |              |                |                   |                                               |      
|Balances                                                     |              |               
|December 31, 2003                                            |              |                | $                 | 8,574,703                                     |      
|Net income                                                   |              |                |                   |                                               |      
|Other comprehensive income-change in net                     |              |               
|unrealized gain on securities available for sale, net of tax |              |                |                   |                                               |      
|                                                             |              |                |                   |                                               |      
|Total comprehensive income                                   |              |                |                   |                                               |      
|                                                             |              |                |                   |                                               |      
|Tax benefit of nonqualified stock options exercised          |              |                |                   | 13,600                                        |      
|Issuance of 5,333 shares of common stock                     |              |                |                   | 30,364                                        |      
|Treasury Stock                                               |              |                |                   |                                               |      
|                                                             |              |                |                   |                                               |      
|Balances                                                     |              |               
|March 31, 2004                                               |              |                | $                 | 8,618,667                                     |      
|                                                             |              |                |                   |                                               |      

4

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RIDGESTONE FINANCIAL
SERVICES, INC. AND SUBSIDIARIES                                         NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS                                                   March
31, 2004 and 2003                                                         (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 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 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 months ended March 31, 2004 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2004. Certain
information and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States 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, 2003. 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, 2003.

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 March 31, 2004, 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.

|                                                                                      | March 31,
2004 | March 31,
2003
|------------------------------------------------------------------------------------- | -------------- | --------------
|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

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# 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 of 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.

Critical Accounting
Policies.In preparing consolidated financial statements in conformity with
accounting principles generally accepted in the United States and conformed to general
practices within the banking industry, 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 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 cash flow
or collateral. Included in this group are those loans that meet the criteria as being
impaired under the definition in FASB Statement 114. 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. On a quarterly basis,
impairment is measured on a loan by loan basis for commercial loans using 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 based on credit risk gradings. 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
pool using a defined methodology. The methodology considers historical loss information
and regulatory averages. Loan types reviewed under this methodology include real estate,
consumer and commercial loans.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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. Because of this uncertainty, 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 and changes in the economy. 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
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. The differences relate principally to the allowance for loan losses,
deferred compensation, and net operating loss carryforwards. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the provision
for income taxes. 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 ended March 31, 2004. 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 March 31, 2004 were $89,923,482 compared to
$88,322,699 as of December 31, 2003, an increase of $1,600,783 or 2%. Assets increased
primarily in cash and cash equivalents and mortgage loans held for sale funded primarily
by deposit growth.

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
$3,702,409 at March 31, 2004, compared to $2,955,356 as of December 31, 2003. The Bank
reported $2,913,000 of federal funds sold (which are inter-bank funds with daily
liquidity) on March 31, 2004. There were $2,278,000 in federal funds sold as of December
31, 2003. Short-term investments in commercial paper with maturities of three months or
less increased to $3,250,000 as of March 31, 2004 from $500,000 as of December 31, 2003.
The Bank employed excess liquidity in these short-term investments so cash would remain
available to fund expected future loan growth.

Interest Bearing Deposits.Total interest bearing deposits in banks as of March 31, 2004 were $12,334
compared to $551,079 as of December 31, 2003, a decrease of $538,745. The decrease is
primarily due to the Company transferring funds from an interest-bearing account at
another financial institution to a non-interest-bearing account at the Bank to allow the
Company to manage the funds in a more efficient manner.

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 decreased to
$749,920 at March 31, 2004 from $750,060 at December 31, 2003.

Loans.          Loans
decreased by $4,063,559, or 5%, as total loans prior to the allowance for           loan
losses decreased from $75,126,628 as of December 31, 2003 to $71,063,069 as           of
March 31, 2004. The slowdown in the national economy resulted in reduced loan
          demand in the third and fourth quarters of 2003, which continued into the first
          quarter of 2004. However, the bank experienced increasing loan demand toward
the           close of the first quarter of 2004, and management anticipates continued
          short-term growth in loan balances as the economy continues to improve.

7

---

Lower mortgage loan rates resulted in
greater opportunities for refinancing mortgages in the long-term, fixed rate market,
resulting in a $1,531,850 increase in mortgage loans held for sale, from $650,000 at
December 31, 2003 to $2,181,850 at March 31, 2004. These loans are 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 March 31, 2004, the mix of the
loan portfolio included Commercial loans of $25,924,365 or 37% of total loans; Commercial
Real Estate loans of $30,124,077 or 42% of total loans; Residential Real Estate loans of
$14,444,960 or 20% of total loans; and Consumer loans of $569,667 or 1% of total loans.

At December 31, 2003, the mix of the
loan portfolio included Commercial loans of $26,931,914 or 36% of total loans; Commercial
Real Estate loans of $31,086,552 or 41% of total loans; Residential Real Estate loans of
$16,506,285 or 22% of total loans; and Consumer loans of $601,877 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 $729,874 or 1.03% of gross loans at
March 31, 2004 compared to $729,643 or 0.97% of gross loans at December 31, 2003.

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. No
provisions for loan losses were made for the three months ended March 31, 2004 and $30,000
in provisions were made for the three months ended March 31, 2003. The Bank incurred no
charge-offs during the three months ended March 31, 2004 and 2003. 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 March 31, 2004 were $74,262,346 compared to           $72,656,531 as of December
31, 2003, an increase of $1,605,815 or 2%, with the           majority of growth in money
market deposits.

Borrowed Funds.
The Bank is a member of the Federal Home Loan Bank (the FHLB) and has a master
contract with the FHLB which provides for borrowing up to a maximum of 60% of the book
value of the Banks first lien one- to four-family real estate loans, a limit of
approximately $4,840,000 at March 31, 2004. As of March 31, 2004, the Bank has borrowed
$4,500,000 from the FHLB, with applicable interest rates ranging from 2.03% to 3.99% and
with varying maturities through January 2007.

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 March 31, 2004 was 96% compared to
          103% as of December 31, 2003.

As of March 31, 2004, the Company had
$3,702,409 in cash and due from banks, $2,913,000 in federal funds sold and $3,250,000 in
short-term investments plus various sources of credit available to fund loans and loan
commitments. These available credit sources include Federal Funds lines of credit, loans
from the FHLB and loans from the Federal Reserve Bank. Certain of these lines would be
collateralized with other assets of the Bank.

Net cash used in operating activities
for the three months ended March 31, 2004 was $1,578,673 compared to $1,672,823 used in
operations in the prior period. The cash used in operating activities during the first
quarter of 2004 was primarily used to fund an increase in mortgage loans held for sale.

Net cash provided by investing
activities for the three months ended March 31, 2004 was $4,060,947 compared to $2,136,322
used in investing activities in the prior period. The net increase in cash provided by
investing activities during the first quarter of 2004 was primarily due to a $4,063,790
decrease in loans.

8

---

Net cash provided by financing
activities for the three months ended March 31, 2004 was $1,649,779 compared to $3,523,227
in the prior period. In the first quarter of 2004, the cash provided by financing
activities was primarily an increase in deposits.

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 March 31, 2004, the Company had
$21,912,640 in financial instruments with off-balance sheet risk compared to $21,625,028
as of December 31, 2003.

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.

Capital Resources.Capital ratios applicable to the Bank as of March 31, 2004 and December 31, 2003 were
as follows:

|                                         | Actual | For Capital Adequacy
Purposes | To Be Well Capitalized
Under Prompt Corrective
Action Provisions
|---------------------------------------- | ------ | ----------------------------- | ----------------------------------------------------------------
|
|As of March 31, 2004                     |        |                               |                                                                 
|Total capital (to risk weighted assets)  |        |                               | $                                                               
|Tier 1 capital (to risk weighted assets) |        |                               | $                                                               
|Tier 1 capital (to average assets)       |        |                               | $                                                               
|As of December 31, 2003                  |        |                              
|Total capital (to risk weighted assets)  |        |                               | $                                                               
|Tier 1 capital (to risk weighted assets) |        |                               | $                                                               
|Tier 1 capital (to average assets)       |        |                               | $                                                               

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 March 31, 2004 and December 31, 2003.

# Results of Operations

Net Income. For
the three months ended March 31, 2004, the Company reported net income of $79,193, a
decrease of $118,840 or 60% compared to net income of $198,033 for the three months ended
March 31, 2003. The decrease for the three months ended March 31, 2004 is attributed
primarily to lower loan volume, a decline in gains on sales of loans sold in the secondary
market, and increased salaries and benefits.

Net Interest
Income. Total interest income decreased by $151,380 to $1,107,840 for the
three months ended March 31, 2004 as compared with the same period in 2003. Total interest
expense decreased by $51,861 to $327,118 for the three months ended March 31, 2004 as
compared with the same period in 2003.

Net interest income before provision
for loan losses for the three months ended March 31, 2004 was $780,722 compared to
$880,241 for the same period in 2003, a decrease of $99,519 or 11%. The decrease is
primarily due to lower loan volume. For the three months ended March 31, 2004, the
Companys net interest margin declined to 4.01% compared to 4.56% for the same period
in 2003. This decline is primarily due to cash resulting from loan paydowns being employed
in lower-yielding investments.

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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.

Based on the analysis performed, the
Company made no provision for loan losses during the first three months of 2004 and
$30,000 during the same period in 2003. The Bank incurred no charge-offs during the three
months ended March 31, 2003 and 2004.

Non-Interest
Income. Total noninterest income consisted of maintenance, overdrafts and
stop payment charges on deposit accounts, safe deposit fees, and miscellaneous fees such
as wire transfers, interchange fees on debit cards, and merchant credit card income, along
with gains on sales of loans, commission income generated by the investment center and an
increase in cash surrender value of life insurance policies. Total non-interest income was
$144,586 for the three months ended March 31, 2004 compared to $218,091 for the same
period in 2003, a decrease of $73,505 or 34%. The decrease in non-interest income is
primarily due to lower gains on sales of loans in the secondary market as a result of
higher interest rates in the first quarter of 2004 compared to the prior period. However,
mortgage loan rates declined during the latter part of the first quarter of 2004, which
resulted in greater opportunities for refinancing and an increase in mortgage loans held
for sale when compared to December 31, 2003.

Non-Interest Expense.Total noninterest expenses consisted primarily of salaries and employee
benefits, occupancy and equipment expenses, data processing fees and professional fees.
Total non-interest expenses were $815,963 for the three months ended March 31, 2004
compared to $761,611 for the same period in 2003, an increase of $54,352 or 7%. The
increase in non-interest expenses for the three months ended March 31, 2004 is attributed
to higher personnel costs.

# 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.

10

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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
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-15(e) and
15d-15(e), 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 have been no changes in the
Companys internal controls over financial reporting that occurred during the
Companys last fiscal quarter that have materially affected, or are reasonably likely
to materially affect, the Companys internal controls over financial reporting.

11

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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 and Chief Executive Officer)
                           pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
by Timothy D. Dondlinger (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 and Chief Executive Officer)
                           and Timothy D. Dondlinger (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 March 31, 2004. The Company furnished the
following Current Reports on Form 8-K during the quarter ended March 31, 2004:

|Date of Report   | Date Furnished   | Items                                              
|---------------- | ---------------- | ---------------------------------------------------
|January 28, 2004 | January 29, 2004 | Item 12, including Consolidated Balance Sheets at  
|                 |                  | December 31, 2003 and December 31, 2002 and        
|                 |                  | Consolidated Statements of Income for the three and
|                 |                  | twelve months ended December 31, 2003 and 2002     

12

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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.

|                     | RIDGESTONE FINANCIAL SERVICES, INC.
|-------------------- | -----------------------------------
|Date:  May  13, 2004 | /s/ Paul E. Menzel                 
|                     | Paul E. Menzel                     
|                     | Chairman of the Board and Chief    
|                     | Executive Officer                  
|Date:   May 13, 2004 | /s/ Timothy D. Dondlinger          
|                     | Timothy D. Dondlinger              
|                     | Senior Vice President and Treasurer

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