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, 1998

[ ]  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                            39-179151   
                                                            
         (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)

                                  414-789-1011
                           (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 September 30, 1998
    -----                           ------------------------------------

    Common Stock, no par value                   876,055

Transitional Small Business Disclosure Format:       Yes            No     X    


<PAGE>


               RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY

                                      INDEX

                                                                            Page
                                                                          Number
PART I - FINANCIAL INFORMATION

    Item 1.  Financial Statements............................................. 1

             Consolidated Statements of Financial Condition at
             September 30, 1998 and December 31, 1997......................... 1

             Consolidated Statements of Income
             For the Three and Nine Months Ended September 30, 
             1998 and 1997.................................................... 2

             Consolidated Statements of Cash Flows
             For the Nine Months Ended September 30, 1998 and 1997............ 3

             Consolidated Statements of Stockholders' Equity
             For the Nine Months Ended September 30, 1998 and 1997............ 4

             Notes to Consolidated Financial Statements....................... 5


    Item 2.       Management's Discussion and Analysis........................ 7



PART II - OTHER INFORMATION

    Item 6.       Exhibits and Reports on Form 8-K........................... 12



SIGNATURES .................................................................. 13

EXHIBIT INDEX ............................................................... 14


<PAGE>

                                                       

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


               RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                    September 30, 1998 and December 31, 1997

                                                September 30,    December 31,
                                                     1998            1997
                                                 (Unaudited) 
                                               --------------  --------------
ASSETS
Cash and due from banks                         $  2,120,061    $  2,671,051
Federal funds sold                                 8,623,000       7,994,000
Interest-bearing deposits                              6,655           4,185
                                                -------------   -------------
Total cash and cash equivalents                   10,749,716      10,669,236

Investments-Held to Maturity                       2,042,000       4,253,095
         (fair value Sep 1998, $1,999,556
                 and Dec 1997, $4,298,356)
Investments-Available for Sale                       613,225         874,406


Loans receivable                                  50,559,001      45,557,771
Less: Allowance for estimated loan losses           (543,367)       (624,740)
                                                -------------   -------------
Net loans receivable                              49,281,701      44,856,521

Mortgage loans held for sale                       1,277,300         701,250
Office building and equipment, net                 1,323,619       1,403,082
Other real estate owned                            1,202,724       1,774,489
Accrued interest & other assets                    2,224,885         495,108 
                                                -------------   -------------

         Total assets                           $ 69,449,103    $ 65,103,697 
                                                =============   =============


LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
         Demand                                 $  7,716,575    $  7,296,264
         Savings, NOW and other time
          deposits                                54,850,642      51,191,361 
                                                -------------   -------------
           Total deposits                         62,567,217      58,487,625 
                                                -------------   -------------

Accrued interest & other liabilities                 725,430         752,772 
                                                -------------   -------------

         Total liabilities                        63,292,647      59,240,397 
                                                -------------   -------------

STOCKHOLDERS' EQUITY
Common stock, no par value:
 shares authorized:
10,000,000 at Sept 30, 1998, 1,000,000
at Dec 31, 1997;
876,055 issued and outstanding                     8,411,732       7,721,399
                                                  
Retained earnings (deficit)                       (2,272,745)     (1,837,493)
Accumulated other comprehensive 
     income(loss)                                     17,469         (20,606)
                                                -------------   -------------

   Total stockholders' equity                      6,156,456       5,863,300 
                                                -------------   -------------

   Total liabilities and stockholders' equity    $ 69,449,103    $ 65,103,697 
                                                =============   =============
   
                                       -1-

<PAGE>

<TABLE>

               RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
             Three and Nine Months Ended September 30, 1998 and 1997
                                   (Unaudited)
<CAPTION>

                                                Three Months Ended            Nine Months Ended     
                                              Sept 30,      Sept 30,        Sept 30,      Sept 30,
                                                1998          1997            1998          1997    
                                           ------------- -------------   ------------- -------------

Interest income:
<S>                                        <C>           <C>             <C>           <C>         
         Interest and fees on loans        $  1,118,712  $    802,339    $  3,127,392  $  1,905,978
         Interest on securities                 138,521        62,939         292,327       151,255
         Interest on federal funds sold          50,057        95,046         202,252       458,926
         Interest on deposits in banks            1,585         3,970           5,945        11,107 
                                           ------------- -------------   ------------- -------------
             Total interest income            1,308,875       964,294       3,627,916     2,527,266 
                                           ------------- -------------   ------------- -------------

Interest expense:
         Interest on deposits                   761,269       542,852       2,151,636     1,495,304 
                                           ------------- -------------   ------------- -------------

             Net interest income before
             provision for loan losses          547,606       421,442       1,476,280     1,031,962

Provision for loan losses                        30,000             0          45,000             0 
                                           ------------- -------------   ------------- -------------
             Net interest income after
             provision for loan losses          517,606       421,442       1,431,280     1,031,962 
                                           ------------- -------------   ------------- -------------

Non-interest income:
         Loan fees                               35,565         8,051          90,746        16,522
         Gain on sale of AFS securities               0         7,587               0       167,659
         Service charges on deposit accts         8,596         4,594          26,236        15,749
         Miscellaneous                           22,120        22,158          56,999        57,408 
                                           ------------- -------------   ------------- -------------
             Total other operating income        66,281        42,390         173,981       257,338 
                                           ------------- -------------   ------------- -------------

Non-interest expense:
         Salaries and employee benefits         298,185       240,630         823,395       704,515
         Occupancy and equipment expense        101,831       100,150         277,238       260,548
         Loss on sale of AFS securities               0             0           7,687             0
         Other expense                          132,833       120,159         384,093       287,251 
                                           ------------- -------------   ------------- -------------
             Total other operating expense      532,849       460,939       1,492,413     1,252,314 
                                           ------------- -------------   ------------- -------------

Income before income taxes                       51,038         2,893         112,848        36,986

Income taxes                                    (49,533)            0         (142,233)        1,251 
                                           ------------- -------------   -------------- -------------

Net income                                 $    100,571  $      2,893    $     255,081  $     35,735 
                                           ============= =============   ============== =============

Earnings per share:
         Basic                             $       0.12  $       0.00    $       0.29  $       0.04
         Diluted                           $       0.12  $       0.00    $       0.29  $       0.04

Average shares outstanding                      876,055       876,055         876,055       876,055
</TABLE>
                                      -2-

<PAGE>

<TABLE>

                      RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                          Nine Months Ended September 30, 1998 and 1997
                                        (Unaudited)
<CAPTION>

                                                                        Nine Months Ended 
                                                                 Sept 30, 1998   Sept 30, 1997
                                                                 -------------   -------------
Cash Flows From Operating Activities:
<S>                                                             <C>             <C>         
      Net income                                                $    255,081    $     35,735
             Adjustments to reconcile net income to
             net cash used in operating activities:
                Depreciation                                         118,575         133,730
                (Gain)loss on sale of investment securities            7,687        (167,659)
                Provision for loan losses                             45,000               0
                Accretion/Amortization of securities-net                (452)              0
             (Increase)decrease in assets
                Interest receivable                                   11,237        (137,083)
                Other assets                                      (1,741,014)        (68,805)
             Increase(decrease) in liabilities:
                Accrued interest                                      60,410         126,793
                Other liabilities                                    (87,751)              0 
                                                                -------------   -------------
             Total adjustments                                    (1,586,308)       (113,024)
                                                                --------------   ------------
      Net cash (used in) operating activities                     (1,331,227)        (77,289)
                                                                --------------   ------------

Cash Flows From Investing Activities:
         Proceeds from sales of available for sale securities        141,316       1,161,046
         Purchase of available for sale securities                  (138,200)     (1,385,423)
         Proceeds from maturities of held to maturity securities   2,500,000         309,664
         Purchase of held to maturity securities                           0        (250,000)
         Net proceeds on other real estate                           449,276               0
         Purchases of premises and equipment                         (39,112)        (73,274)
         Net increase in loans                                    (5,581,165)    (20,965,018)
                                                                -------------   -------------
      Net cash used in investing activities                       (2,667,885)    (21,203,005)
                                                                -------------   -------------

Cash Flows From Financing Activities:
         Net increase in deposits                                  4,079,592      11,872,940 
                                                                -------------   -------------
      Net cash provided by financing activities                    4,079,592      11,872,940 
                                                                -------------   -------------

Net increase(decrease) in cash and cash equivalents                   80,480      (9,407,354)
Cash and cash equivalents, beginning                              10,669,236      14,937,881 
                                                                -------------   -------------
Cash and cash equivalents, ending                               $ 10,749,716    $  5,530,527 
                                                                =============   =============

Supplemental  disclosure  of cash flow  information  
  Cash paid during the period for:
             Interest                                           $  2,091,225    $  1,335,361 
                                                                =============   =============

             Income taxes                                       $     10,267    $      1,276 
                                                                ============    =============

Supplemental schedule of noncash investing activities:
Net changes in unrealized gain on securities
available for sale                                              $     38,075    $    288,194 
                                                                =============   =============
</TABLE>
                                      -3-

<PAGE>

<TABLE>

               RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Nine Months Ended September 30, 1998 and 1997
<CAPTION>

                                                                          Accumulated
                                                                             Other
                                                                          Comprehensive
                                             Common         Retained        Income
                                              Stock          Earnings        (Loss)   
                                         -------------    -------------  ---------------

Balances
<S>                                       <C>             <C>            <C>         
    December 31, 1996 as reported         $  7,721,399    $ (1,879,126)  $     25,732
Stock dividend                                 690,333        (690,333)               
                                          -------------   -------------  -------------

Balance, December 31, 1996(restated)         8,411,732      (2,569,459)        25,732
Net gain-YTD 1997                                               35,735

Other comprehensive income-change in
unrealized gain on securities                                                 288,194 


Balances
    September 30, 1997                     $ 8,411,732    $ (2,533,734)  $    313,926 
                                          ============   =============  =============





Balances
    December 31, 1997                      $ 8,411,732    $ (2,533,734)  $    (20,606)

Net gain-YTD 1998                                               255,081

Other comprehensive income-change in
unrealized gain on securities                                                  38,075  



Balances
    September 30, 1998                     $ 8,411,732    $ (2,278,653)  $     17,469 
                                          ============   =============  =============
</TABLE>
                                      -4-

<PAGE>


               RIDGESTONE FINANCIAL SERVICES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1998 and 1997
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-QSB. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  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 nine  months  ended  September  30,  1998  are not  necessarily
indicative  of the results that may be expected for the year ended  December 31,
1998. 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, 1997.

NOTE 2 - PRINCIPLES OF CONSOLIDATION

The  accompanying  consolidated  financial  statements  include the  accounts of
Ridgestone  Financial  Services,  Inc.,  (the  "Company")  and its wholly  owned
subsidiary,  Ridgestone Bank (the "Bank"). All significant intercompany accounts
and transactions have been eliminated in consolidation.

NOTE 3 - COMPARATIVE DATA

The  Company  was  incorporated  in May  of  1994,  but  its  primary  operating
subsidiary,  the Bank,  did not  commence  operations  until  December  7, 1995.
Comparative  statements  of income for the three and nine  months and cash flows
for the nine months ended  September  30, 1998 and  September 30, 1997 have been
presented.

NOTE 4 - STOCK DIVIDEND

On May 21, 1998, Ridgestone Financial Services, Inc. paid a 5% stock dividend on
issued and outstanding  shares of its common stock.  The dividend totaled 41,717
shares. All share,  common stock and retained  earnings,  and earnings per share
information has been restated retroactively to reflect the stock dividend.

NOTE 5 - COMPREHENSIVE INCOME

The  Financial  Accounting  Standards  Board  (FASB)  has issued  SFAS No.  130,
"Reporting  Comprehensive Income," which is effective for fiscal years beginning
after December 15, 1997. This statement  establishes standards for reporting and
display of comprehensive income and its components  (revenues,  expenses,  gains
and  losses)  in a full  set  of  general  purpose  financial  statements.  This
statement  requires  that all items that are  required  to be  recognized  under
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  displayed  with  the  same  prominence  as  other
financial statements.  The Company adopted SFAS No. 130 on December 31, 1997 and
all required disclosures will be included in the Company's 1998 Annual Report on
Form 10-KSB.

                                      -5-

<PAGE>


The Company's comprehensive income for the three and nine months ended September
30, 1998 and September 30, 1997 is as follows:


<TABLE>
<CAPTION>


                                                    Three Months Ended           Nine Months Ended   
                                                   Sept 30,     Sept 30,        Sept 30,     Sept 30,
                                                     1998         1997            1998         1997  
                                                -----------  -----------     -----------  -----------

<S>                                             <C>          <C>             <C>          <C>       
  Net income                                    $  100,571   $    2,893      $  255,081   $   35,735

  Other comprehensive income, net of taxes:
    Unrealized gains arising during period           9,541      281,111          32,694      405,555
    Less reclassified adjustment for
      gains (losses) included in net income              0       (5,310)          5,381     (117,360)
                                                -----------  -----------     -----------  -----------

      Total other comprehensive income               9,541      275,801          38,075      288,195 
                                                -----------  -----------     -----------  -----------

  Comprehensive income                          $  110,112   $  278,694      $  293,156   $  323,930 
                                                ===========  ===========     ===========  ===========
</TABLE>
                                      -6-

<PAGE>


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  by  the  Federal  Deposit  Insurance
Corporation.  The Bank provides  full service  commercial  and consumer  banking
services in Brookfield, Wisconsin, and adjacent communities.

The following is a discussion of the Company's  Financial  Condition and Results
of Operations for the three and nine months ended September 30, 1998.

Financial Condition

Total  Assets.  Total  assets  of the  Company  as of  September  30,  1998 were
$69,449,103 compared to $65,103,697 as of December 31, 1997.

Loans.  Total  loans  prior to the  allowance  for  estimated  loan  losses were
$50,559,001 as of September 30, 1998, compared to $45,557,771 as of December 31,
1997.

At September 30, 1998, the mix of the loan portfolio  included  Commercial loans
of  $21,777,745  or  43%  of  total  loans;  Commercial  Real  Estate  loans  of
$13,832,398 or 27% of total loans;  Residential Real Estate loans of $11,141,611
or 22% of total loans; and Consumer loans of $3,807,247 or 8% of total loans.

Allowance for Loan Losses.  The allowance for estimated loan losses was $543,367
or 1.07 % of gross  loans  on  September  30,  1998.  In  accordance  with  FASB
Statements 5 and 114, the allowance is provided for losses that have potentially
been  incurred  based on the Bank's  outstanding  loan balance as of the balance
sheet date.  The Bank  evaluates  the adequacy of the loan loss reserve based on
past events and current economic conditions, and does not include the effects of
potential losses on specific loans or groups of loans that are related to future
events or changes in economic conditions which are then unknown to the Bank. For
additional  information  regarding the Company's  allowance for loan losses, see
"Results of Operations - Provision for Loan Losses' below.

In the first nine months of 1998,  the Bank charged $3,884 against the loan loss
reserve.  The Bank also reduced  Other Real Estate Owned by $122,489 and charged
this amount  against the loan loss reserve in order to reduce the value of Other
Real Estate Owned to the  appraised  value as received on December 30, 1997.  In
the first nine months of 1998, the Bank further  reduced Other Real Estate Owned
by $449,276 as a result of the sale of real estate assets owned by the Bank.

Cash and Cash  Equivalents.  Cash and cash  equivalents  were  $10,749,716 as of
September 30, 1998 compared to  $10,669,236 as of December 31, 1997, an increase
of $80,480.  Cash and cash equivalents represent cash maintained at the Bank and
funds  that  the  Bank  and  the  Company  have  deposited  in  other  financial
institutions.

                                      -7-

<PAGE>


Investment   Securities.   The  Bank's  investment  portfolio  consists  of  (i)
securities  purchased with the intent to hold the  securities  until they mature
and (ii)  securities  placed in the  available  for sale  category  which may be
liquidated to provide cash for operating or financing  purposes.  The securities
held-to-maturity  portfolio  was  $2,042,000  at September  30, 1998 compared to
$4,253,095 at December 31, 1997. The securities available-for-sale portfolio was
$613,225 at September 30, 1998 compared to $874,406 at December 31, 1997.

Deposits.  As of September 30, 1998, total deposits were $62,567,217 compared to
$58,487,625 at December 31, 1997.

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.

The Company currently does not expect to experience any material fluctuations in
its net  interest  income in the  short-term  as a  consequence  of  changes  in
interest rates.

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  short-term  loans and  securities.
Liquidity  needs are  influenced  by  economic  conditions,  interest  rates and
competition.  Although loan growth can negatively affect  short-term  liquidity,
management  believes  the Bank  will be able to meet  liquidity  demands  as the
Bank's loan growth continues.

Results of Operations

For the three-month  period ended  September 30, 1998, the Company  reported net
income of $100,571 as compared to a profit of $2,893 in the same period of 1997.
For the nine month period ended  September  30, 1998,  the Company  reported net
income of $255,081 which compares  favorably to a profit of $35,735 for the nine
months ended  September  30,  1997.  The  increased  earnings is  attributed  to
increased loan growth,  improved  margins and increased fee generation in loans.
Additionally,  a tax benefit  related to a tax loss  carryforward  accounted for
$50,000 and $150,000 of net income for the three and nine months ended September
30, 1998, respectively.

Net Interest  Income.  Net interest income before  provision for loan losses for
the three and nine months ended  September 30, 1998 was $547,606 and  $1,476,280
compared to $421,442 and $1,031,962 for the same periods in 1997, an improvement
of 30% and 43%, respectively.  The increase was due primarily to greater average
outstanding balances in interest bearing assets, primarily loans. Total interest
income for the three and nine  months  ended  September  30, 1998  increased  by
$344,581 and  $1,100,650 as compared with the same periods in 1997,  while total
interest expense rose by $218,417 and $656,332.

                                      -8-


<PAGE>


Provision  for  Loan  Losses.   The  provision  for  loan  losses  is  based  on
management's  evaluation  of factors such as the local and national  economy and
the risks associated with the loans in the portfolio.

During the nine-month  period ended September 30, 1998, a $45,000  provision was
made to the loan loss reserve to ensure that the loan loss reserve is maintained
at adequate levels.

Non-Interest  Income and Expense.  Total other operating income (excluding gains
and losses on the sale of  securities)  was $66,281 for the three  months  ended
September  30, 1998 compared to $34,803 for the same period in 1997, an increase
of $31,478. Total other operating income (excluding gains and losses on the sale
of  securities)  was  $173,981  for the nine  months  ended  September  30, 1998
compared to $89,679 for the same period in 1997, an increase of 94%. Greater fee
income from loans accounted for the majority of this increase.

Total  other  operating  expenses  were  $532,849  for the  three  months  ended
September 30, 1998 compared to $460,939 for the same period in 1997, an increase
of 16%.  For the three month period  ending  September  30,  1998,  salaries and
benefit  expense was $298,185 or 56% of total  operating  expenses and occupancy
and equipment expense was $101,831 or 19% of total operating  expenses.  Payroll
and occupancy  expense  increased by $59,236 over the same period in 1997. Other
expense increased by $12,674 from the same period in 1997.

Total  other  operating  expenses  were  $1,492,413  for the nine  months  ended
September  30, 1998  compared  to  $1,252,314  for the same  period in 1997,  an
increase  of 19% from  the  prior  period  in 1997.  For the nine  months  ended
September 30, 1998, salaries and employee benefit expense was $823,395 or 55% of
total operating  expenses,  and occupancy and equipment  expense was $277,238 or
19% of total  operating  expenses.  Other expense  increased by $96,842 from the
same period in 1997.


Year 2000 Impact

Existing computer programs generally recognize dates and perform calculations by
using only the last two digits of any given year.  These  computer  programs may
not  recognize a year that begins  with "20"  instead of "19." As a result,  the
functions  of  computer   software,   hardware  and  embedded  systems  at  many
businesses,  including the Bank,  may experience  failures or produce  incorrect
results  when the  calendar  changes to January 1,  2000.  Systems  failures  or
miscalculations  at the Bank or the Bank's  vendors or  customers  may result in
disruption  of  operations,  including  a failure  to process  information  or a
reduced likelihood of collecting loan payments on a timely basis.

The Bank's Readiness.  To determine whether and to what extent it may experience
disruptions  as a result of the turning of the Year 2000  ("Y2K"),  the Bank has
established   a  committee  to  oversee  the   assessment   process  and  report
periodically  to Bank  management.  The  Bank is  currently  in the  process  of
assessing  (i) the Y2K status of its own internal  systems,  including  computer
equipment  (hardware),   applications   (software),   and  other  electronically
controlled equipment that does not process data (embedded systems); (ii) the Y2K
status of its  vendors'  systems;  and (iii)  the Y2K  status of its  customers'
systems.

The Bank has completed  testing or received  manufacturer  certification  of Y2K
compliance with respect to 100% of its internal  hardware and embedded  systems.
All such systems appear to be Y2K compliant. The Bank spent approximately $1,500
on  testing  these  systems  to date  and does not  expect  to incur  additional
material costs in testing internal computer hardware or embedded systems.

                                      -9-

<PAGE>


The following  chart displays the current status of the Bank's  mission-critical
software  with respect to Y2K  compliance.  Of these  systems,  one is currently
being  installed and should be in place and Y2K compliant by January 31, 1999 at
a cost of $2,500. One system has not been  vendor-certified as Y2K compliant and
is  scheduled  to be  replaced  in the first  quarter of 1999 at a cost of about
$2,000.  Testing has been completed  satisfactorily on five of the nine systems.
Two other systems are currently being tested with satisfactory results to date.
<TABLE>
<CAPTION>

------------------------------------------ ----------------- ---------------------------------------------------------------

   Internal Mission-critical Software      Vendor-certified  
                Category                      Compliant                     Status of Testing/Replacement
------------------------------------------ ----------------- ---------------------------------------------------------------

<S>                                          <C>             <C>    
Operating systems                                Yes         Testing complete - satisfactory
------------------------------------------ ----------------- ---------------------------------------------------------------

Banking platform applications                    Yes         Testing in process - Phase 1 completed with satisfactory
                                                             results, Phase 2 scheduled for completion in the first
                                                             quarter of 1999
                                                             
------------------------------------------ ----------------- ---------------------------------------------------------------

On-line PC banking                               Yes         Testing in process - satisfactory to date
------------------------------------------ ----------------- ---------------------------------------------------------------

Telephone banking                                 No         Replacement scheduled for the first quarter of 1999
------------------------------------------ ----------------- ---------------------------------------------------------------

Loan documentation                               Yes         New system being installed
------------------------------------------ ----------------- ---------------------------------------------------------------

Document management                              Yes         Testing complete - satisfactory
------------------------------------------ ----------------- ---------------------------------------------------------------

Contact management                               Yes         Testing complete - satisfactory
------------------------------------------ ----------------- ---------------------------------------------------------------

General office applications                      Yes         Testing complete - satisfactory
------------------------------------------ ----------------- ---------------------------------------------------------------

Data warehousing                                 Yes         Testing complete - satisfactory
------------------------------------------ ----------------- ---------------------------------------------------------------
</TABLE>

The Bank may  experience  loan  collection or other  credit-related  problems if
significant  customers are not Y2K compliant before the turn of the century.  In
order to  assess  their  Y2K  compliance,  the Bank  has sent Y2K  surveys  to a
majority of its commercial customers.  Many of these customers have responded to
the  Bank's  inquiries  and  continue  to  update  the Bank as new data  becomes
available.  The Bank intends to continue  surveying new customers as appropriate
to assess  their Y2K  readiness.  To date,  the Bank has  received  satisfactory
responses from most of its major commercial customers,  and management currently
does not  anticipate  the Bank  will  experience  material  adverse  effects  on
operations as a result of customer non-compliance.

Similarly,  the Bank is receiving regular updates from almost all of the vendors
who provide  mission-critical  products and services. The Bank is making efforts
to contact those vendors who have not yet provided  information  regarding their
Y2K readiness.  Of those vendors whose  compliance  status is known to the Bank,
all are either already  compliant or appear to be making  satisfactory  progress
toward compliance.

Y2K  Compliance  Costs.  The  Bank  outsources  a  majority  of its  information
processing,  and its  internal  computer  systems  generally  rely  on  software
provided by third-party  vendors. As a result, the Bank has incurred very little
cost to date, less than $5,000,  in assessing its internal  readiness.  The Bank
will incur additional  remediation  costs which are not expected to be material,
generally  in  connection  with (i) its  continuing  dialogue  with  vendors

                                      -10-

<PAGE>


and customers to assess their readiness, (ii) the installation of one new system
and the replacement of one old system, and (iii) contingency planning and status
updates.  The Bank currently  expects that such additional costs will not exceed
$15,000.

Y2K Risks.  The most  significant  Y2K risks to the Bank are associated with the
potential non-compliance of its third-party vendors who provide mission-critical
services.  Since  the Bank  outsources  most of its  information  processing  to
third-party  vendors,  such a failure  could result in higher  operating  costs,
increased  staffing needs or the temporary  inability to provide needed services
to  customers.  Likewise,  the  failure  of  those  vendors  providing  critical
infrastructure services, specifically, power and communications, could result in
temporary operational difficulties at the Bank.

Y2K failures of the Bank's significant  commercial customers could result in the
inability  of those  customers  to make timely  payments  on loans,  potentially
resulting in a loss of revenue,  adjustments  to the Bank's loan loss  reserves,
reduced deposit balances or increased cash requirements.

The Bank does not anticipate  material failures of its embedded  systems,  since
virtually none of these systems rely on date-based control systems.

Contingency  Plans. The Bank is currently  developing  contingency plans to deal
with  potential  business  interruptions  caused  by Y2K  non-compliance  of its
vendors,  customers  or internal  systems.  These plans  address a wide range of
potential  problems.  The Bank  expects to have a complete  contingency  plan in
place sometime in the second quarter of 1999.

Forward-Looking  Statements.  This Form 10-QSB contains certain "forward-looking
statements" regarding year 2000 ("Y2K') issues. These statements are intended to
qualify for the safe harbors from liability  provided by the Private  Securities
Litigation  Reform Act of 1995.  They can  generally be  identified  because the
context of such statements will include words such as "believes," "anticipates,"
"expects"  or words of  similar  import.  Whether  or not these  forward-looking
statements  will be  accurate  in the future  will  depend on certain  risks and
factors,  including  those  associated with (i) Y2K readiness of the vendors who
supply the Bank with critical information processing,  credit delivery and other
services;  (ii) Y2K  readiness  of the Bank's key  commercial  customers;  (iii)
unanticipated  expenses  associated  with ongoing  assessment or  remediation of
potential internal Y2K problems which could affect the Bank's  operations;  (iv)
the potential  inadequacy or failure of the testing  procedures used by the Bank
in performing its internal Y2K assessments; (v) the inaccuracy of Y2K compliance
certification  received by the Bank from certain outside vendors regarding those
vendors' systems which are used by the Bank; and (vi) the failure of the Bank to
design  adequate  contingency  plans in the event of internal  or  external  Y2K
non-compliance.  Readers are  cautioned to consider  these risks and factors and
the impact they may have when evaluating these forward-looking statements. These
statements are based only on management's knowledge and expectations on the date
of this Form 10-QSB.  Neither the Company nor the Bank will  necessarily  update
these statements or other  information in the Form 10-QSB based on future events
or circumstances.


                                      -11-

<PAGE>


Item 6. Exhibits and Reports on Form 8-K

1.       Exhibits

         10.1  Salary  Continuation  Agreement,  dated  October 20, 1998, by and
               between Ridgestone Bank and Paul E. Menzel.

         10.2  Split Dollar  Agreement,  dated  October 20, 1998, by and between
               Ridgestone Bank and Paul E. Menzel.

         10.3  Split Dollar  Agreement,  dated  October 20, 1998, by and between
               Ridgestone Bank and Paul E. Menzel.

         10.4  Form of Executive Incentive Retirement  Agreement,  dated October
               20, 1998, by and between Ridgestone Bank and each of Christine V.
               Lake and William R. Hayes.

         10.5  Form of Split Dollar  Agreement,  dated  October 20, 1998, by and
               between Ridgestone Bank and each of Christine V. Lake and William
               R. Hayes.

         27    Financial Data Schedule 
               (EDGAR version only)


         2.    Reports on Form 8-K

               The Company did not file a Current  Report on Form 8-K during the
               quarter ended September 30, 1998


                                      -12-

<PAGE>


                                   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:   November 13, 1998                     /s/ Paul E. Menzel
                                             Paul E. Menzel
                                             President


Date:   November 13, 1998                    /s/ William R. Hayes
                                             William R. Hayes
                                             Vice President and Treasurer
                                      -13-

<PAGE>


                                  EXHIBIT INDEX

Exhibit Number


10.1      Salary Continuation Agreement,  dated October 20, 1998, by and between
          Ridgestone Bank and Paul E. Menzel.

10.2      Split  Dollar  Agreement,  dated  October  20,  1998,  by and  between
          Ridgestone Bank and Paul E. Menzel.

10.3      Split  Dollar  Agreement,  dated  October  20,  1998,  by and  between
          Ridgestone Bank and Paul E. Menzel.

10.4      Form of Executive Incentive  Retirement  Agreement,  dated October 20,
          1998, by and between Ridgestone Bank and each of Christine V. Lake and
          William R. Hayes.

10.5      Form of Split Dollar Agreement, dated October 20, 1998, by and between
          Ridgestone Bank and each of Christine V. Lake and William R. Hayes.

27        Financial Data Schedule
          (EDGAR version only)


                                      -14-