SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                                       OR

[   ]    TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO
         _________________.

                        Commission file number: 000-21137


                            R&G FINANCIAL CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

   Puerto Rico                                                66-0532217
--------------------------------------------------------------------------------
(State of incorporation                                   (I.R.S. Employer
 or organization)                                        Identification No.)

     280 Jesus T. Pinero Avenue
     Hato Rey, San Juan, Puerto Rico                            00918
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

                                 (787) 758-2424
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Indicate by checkmark  whether  Registrant (a) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  report(s)  and  (b) has  been  subject  to such  filing
requirements for at least 90 days.

                              YES [ X ]    NO [   ]

Number of shares of Class B Common Stock  outstanding  as of September 30, 1999:
10,217,731 (Does not include 18,440,556 Class A Shares of Common Stock which are
exchangeable into Class B Shares of Common Stock at the option of the holder.)
<PAGE>
                            R&G FINANCIAL CORPORATION

                                      INDEX

PART I  -  FINANCIAL INFORMATION
--------------------------------

                                                                            Page

ITEM 1.  Consolidated Financial Statements ....................................3

           Consolidated Statement of Financial Condition as of

                    September 30, 1999 (Unaudited) and December 31, 1998.......3

           Consolidated Statements of Income for the Three and Nine

                    Months Ended September 30, 1999 and 1998 (Unaudited).......4

           Consolidated Statements of Comprehensive Income for the Three and

                    Nine Months Ended September 30, 1999 and 1998 (Unaudited)..5
           Consolidated Statements of Cash Flows for the Nine Months

                    Ended September 30, 1999 and 1998 (Unaudited) .............6

           Notes to Unaudited Consolidated Financial Statements ...............8

ITEM 2...Management's Discussion and Analysis ................................13

ITEM 3...Quantitative and Qualitative Disclosures about Market Risk...........16


PART II  - OTHER INFORMATION
----------------------------

ITEM 1.  Legal Proceedings ...................................................16

ITEM 2.  Changes in Securities ...............................................16

ITEM 3.  Defaults upon Senior Securities .....................................16

ITEM 4.  Submission of Matters ...............................................16

ITEM 5.  Other Information ...................................................16

ITEM 6.  Exhibits and Reports on Form 8-K ....................................16

             Signatures ......................................................17

                                       2
<PAGE>
                          PART 1-FINANCIAL INFORMATION
                          ----------------------------


ITEM 1:  CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                                                                    September 30,     December 31,
                                                                                        1999             1998
                                                                                     (Unaudited)
                                                                                     -----------      -----------
                                                                                          ($ in thousands)
<S>                                                                                  <C>              <C>
ASSETS

Cash and due from banks ........................................................     $    38,024      $    51,805
Money market investments:

    Securities purchased under agreements to resell ............................          12,600           11,544
    Time deposits with other banks .............................................          25,493           30,362
    Federal funds sold .........................................................            --             10,018
Mortgage loans held for sale, at lower of cost or market .......................          71,600          117,126
Mortgage-backed securities held for trading, at fair value .....................          50,232          450,546
Mortgage-backed securities available for sale, at fair value ...................         684,518           95,040
Mortgage-backed securities held to maturity, at amortized cost
(estimated market value: 1999 - $24,181,932; 1998 - $28,260,925) ...............          24,112           28,256
Investment securities available for sale, at fair value ........................         224,236           59,502
Investment securities held to maturity, at amortized cost
(estimated market value: 1999- $ 5,910,805; 1998- $6,378,634) ..................           5,939            6,344
Loans receivable, net ..........................................................       1,370,661        1,073,668
Accounts receivable, including advances to investors, net ......................          15,416            9,665
Accrued interest receivable ....................................................          18,910           12,506
Servicing asset ................................................................          71,419           58,221
Premises and equipment .........................................................          17,246           12,963
Other assets ...................................................................          23,341           17,216
                                                                                     -----------      -----------
                                                                                     $ 2,653,747      $ 2,044,782
                                                                                     ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

     Deposits ..................................................................     $ 1,270,212      $ 1,007,297
     Securities sold under agreements to repurchase ............................         672,883          471,422
     Federal funds purchased ...................................................          10,000             --
     Notes payable .............................................................         111,629          182,748
     Advances from FHLB ........................................................         273,500          121,000
     Other borrowings ..........................................................          29,000            9,000
     Accounts payable and accrued liabilities ..................................          30,609           28,020
     Other liabilities .........................................................          10,495            4,133
                                                                                     -----------      -----------
                                                                                       2,408,328        1,823,620
                                                                                     -----------      -----------
<PAGE>
<CAPTION>

                                                                                    September 30,     December 31,
                                                                                        1999             1998
                                                                                     (Unaudited)
                                                                                     -----------      -----------
                                                                                          ($ in thousands)
<S>                                                                                  <C>              <C>
Stockholders'equity:

     Preferred stock, $.01 par value, 10,000,000 shares authorized:
          7.40% Monthly Income  Non-cumulative Preferred Stock, Series A, $25
          liquidation value, 2,000,000 shares authorized, issued and outstanding          50,000           50,000
     Common stock:
          Class A - $.01 par value, 40,000,000 shares authorized, 18,440,556
           issued  and outstanding .............................................             184              184
          Class B - $.01 par value, 30,000,000 shares authorized, 10,217,731
           issued  and outstanding in 1999 (1998-10,146,091) ...................             102              102
     Additional paid-in capital ................................................          41,832           41,544
     Retained earnings .........................................................         151,651          124,418
     Capital reserves of the Bank ..............................................           3,548            3,548
     Accumulated other comprehensive (loss) income .............................          (1,898)           1,366
                                                                                         245,419          221,162
                                                                                     -----------      -----------
                                                                                     $ 2,653,747      $ 2,044,782
                                                                                     ===========      ===========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

                                                                 Three month                     Nine month
                                                                period ended                    period ended
                                                                September 30,                   September 30,
                                                        ----------------------------    ----------------------------
                                                            1999            1998            1999            1998
                                                        ------------    ------------    ------------    ------------
                                                                (Unaudited)                      (Unaudited)
                                                                  ($ in thousands except for per share data)
<S>                                                     <C>             <C>             <C>             <C>
Interest income:
     Loans ..........................................   $     30,291    $     24,591    $     84,865    $     64,735
     Money market and other investments .............          4,374           1,425           5,979           4,391
     Mortgage-backed securities .....................          9,281           7,164          24,924          21,776
                                                        ------------    ------------    ------------    ------------
          Total interest income .....................         43,946          33,180         115,768          90,902
                                                        ------------    ------------    ------------    ------------
Interest expense:
      Deposits ......................................         14,114          10,128          38,273          27,557
      Securities sold under agreements to repurchase           7,493           6,038          18,465          17,577
      Notes payable .................................          3,361           3,295          10,344           9,405
      Other .........................................          3,174           1,983           7,120           3,829
                                                        ------------    ------------    ------------    ------------
          Total interest expense ....................         28,142          21,444          74,202          58,368
                                                        ------------    ------------    ------------    ------------
Net interest income .................................         15,804          11,736          41,566          32,534
Provision for loan losses ...........................         (1,000)         (1,500)         (3,400)         (4,500)
                                                        ------------    ------------    ------------    ------------
Net interest income after provision for loan losses .         14,804          10,236          38,166          28,034
                                                        ------------    ------------    ------------    ------------
Other income:
     Net gain on origination and sale of loans
      and sales of securities available for sale ....          8,674           9,070          28,475          24,287
     Loan administration and servicing fees .........          6,535           3,700          18,914          11,220
     Service charges, fees and other ................          1,434           1,403           5,009           4,059
                                                        ------------    ------------    ------------    ------------
                                                              16,643          14,173          52,398          39,566
                                                        ------------    ------------    ------------    ------------

          Total revenues ............................         31,447          24,409          90,564          67,600
                                                        ------------    ------------    ------------    ------------
<PAGE>
<CAPTION>
                                                                 Three month                     Nine month
                                                                period ended                    period ended
                                                                September 30,                   September 30,
                                                        ----------------------------    ----------------------------
                                                            1999            1998            1999            1998
                                                        ------------    ------------    ------------    ------------
                                                                (Unaudited)                      (Unaudited)
                                                                  ($ in thousands except for per share data)
<S>                                                     <C>             <C>             <C>             <C>
Operating expenses:

     Employee compensation and benefits .............          6,182           4,181          16,414          11,951
     Office occupancy and equipment .................          2,887           2,209           7,994           6,200
     Other administrative and general ...............          8,472           5,672          23,529          16,372
                                                        ------------    ------------    ------------    ------------
                                                              17,541          12,062          47,937          34,523
                                                        ------------    ------------    ------------    ------------
Income before income taxes ..........................         13,906          12,347          42,627          33,077
                                                        ------------    ------------    ------------    ------------
Income tax expense:

     Current ........................................          1,484           2,759           4,881           5,366
     Deferred .......................................          2,305           1,051           4,669           3,723
                                                        ------------    ------------    ------------    ------------
                                                               3,789           3,810           9,550           9,089
                                                        ------------    ------------    ------------    ------------

          Net income ................................         10,117           8,537          33,077          23,988

Less:  Dividends on preferred stock .................           (925)           (308)         (2,775)           (308)
                                                        ------------    ------------    ------------    ------------

          Net income available to common shareholders   $      9,192    $      8,229    $     30,302    $     23,680
                                                        ============    ============    ============    ============

Earnings per common share - Basic ...................   $       0.32    $       0.29    $       1.06    $       0.85
                                                        ------------    ------------    ------------    ------------
                          - Diluted .................   $       0.31    $       0.28    $       1.03    $       0.82
                                                        ------------    ------------    ------------    ------------
Weighted average number of shares outstanding - Basic     28,639,528      28,487,599      28,623,892      28,355,536
                                                          29,342,647      29,243,599      29,342,647      29,111,536
</TABLE>




        The accompanying notes are an integral part of these statements.


                                       4

<PAGE>
<TABLE>
<CAPTION>
R&G FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                                                                   Three Month             Nine Month
                                                                                  period ended            period ended
                                                                                  September 30,           September 30,
                                                                              --------------------    --------------------
                                                                                1999        1998        1999        1998
                                                                              --------    --------    --------    --------
                                                                                   (Unaudited)             (Unaudited)
                                                                                            ($ in thousands)
<S>                                                                           <C>         <C>         <C>         <C>
Net Income ................................................................   $ 10,117    $  8,537    $ 33,077    $ 23,988
                                                                              --------    --------    --------    --------

Other comprehensive income, before tax:

Unrealized gains (losses) on securities:

     Arising during period ................................................     (1,159)      1,020      (5,351)      1,330
     Less: Reclassification adjustments for (gains) losses included
              in net income ...............................................        218        (122)        800        (271)
                                                                              --------    --------    --------    --------
                                                                                  (941)        898      (4,551)      1,059


Income tax benefit (expense) related to items of other comprehensive income        367        (350)      1,775        (413)
                                                                              --------    --------    --------    --------

Other comprehensive (loss)  income, net of tax ............................       (574)        548      (2,776)        646
                                                                              --------    --------    --------    --------

Comprehensive income, net of tax ..........................................   $  9,543    $  9,085    $ 30,301    $ 24,634
                                                                              ========    ========    ========    ========
</TABLE>


        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                     Nine month period ended
                                                                                                          September 30,
                                                                                                  ----------------------------
                                                                                                      1999             1998
                                                                                                  ------------    ------------
                                                                                                         (Unaudited)
<S>                                                                                               <C>             <C>
Cash flows from operating activities:
     Net income ...............................................................................   $     33,077    $     23,988
                                                                                                  ------------    ------------
           Adjustments to reconcile net income to net cash provided by operating activities:
           Depreciation and amortization ......................................................          2,803           2,104
           Amortization of premium (accretion of discount) on investments and
                 mortgage-backed securities, net ..............................................            188             (45)
           Amortization of servicing rights ...................................................          5,158           2,172
           Provision for loan losses ..........................................................          3,400           4,500
           Provision for bad debts in accounts  receivable ....................................            275             225
           Gain on sales of  loans ............................................................         (7,472)         (5,371)
           Loss (gain) on sales of mortgage-backed and investment securities available for sale            800            (271)
           Unrealized loss (profit) on trading securities .....................................             17          (4,117)
           Decrease (increase) in mortgage loans held for sale ................................         45,526         (40,270)
           Net increase in mortgage-backed  securities held for trading .......................        (34,258)        (63,615)
           Increase in receivables ............................................................        (12,430)         (2,724)
           Increase in other assets ...........................................................         (6,633)           (260)
           (Decrease) increase in notes payable ...............................................        (61,119)          8,084
           Increase in accounts payable and accrued liabilities ...............................          6,220          10,961
           Increase in other liabilities ......................................................          6,362             601
                                                                                                  ------------    ------------
               Total adjustments ..............................................................        (51,163)        (88,026)
                                                                                                  ------------    ------------
               Net cash used in operating activities ..........................................        (18,086)        (64,038)
                                                                                                  ------------    ------------

Cash flows from investing activities:
      Purchases of investment securities ......................................................       (198,291)        (37,542)
      Proceeds from sales and maturities of securities available for sale .....................        139,211          81,949
      Proceeds from maturities of securities held to maturity .................................            409           4,715
      Proceeds from sales of loans ............................................................        120,975         172,917
      Net originations of loans ...............................................................       (665,053)       (422,388)
      Purchases of  FHLB stock, net ...........................................................        (11,619)         (6,211)
      Net assets acquired, net of cash received ...............................................           --             4,288
      Acquisition of premises and equipment ...................................................         (6,577)         (3,931)
      Acquisition of servicing rights .........................................................        (18,357)        (13,947)
                                                                                                  ------------    ------------
               Net cash used by investing activities ..........................................       (639,302)       (220,150)
                                                                                                  ------------    ------------


<PAGE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                                                                                     Nine month period ended
                                                                                                          September 30,
                                                                                                  ----------------------------
                                                                                                      1999             1998
                                                                                                  ------------    ------------
                                                                                                         (Unaudited)
<S>                                                                                               <C>             <C>
Cash flows from financing activities:
     Increase in deposits - net ...............................................................        261,371         131,938
     Increase (decrease)  in federal funds purchased ..........................................         10,000         (10,000)
     Increase in securities sold under agreements to repurchase - net .........................        201,461          57,955
     Advances from FHLB .......................................................................        152,500         114,400
     Repayment of advances from FHLB ..........................................................           --           (58,400)
     Repayment of term notes ..................................................................        (10,000)           --
     Increase in other borrowings .............................................................         20,000            --
     Repayment of subordinated notes ..........................................................           --            (3,250)
     Net proceeds from issuance of Series A Preferred Stock ...................................           --            48,079
     Capital contribution to subsidiary .......................................................           --               (12)
     Proceeds from issuance of common stock ...................................................            289            --
     Cash dividends:
           Preferred stock ....................................................................         (2,775)           (308)
           Common stock .......................................................................         (3,069)         (2,300)
                                                                                                  ------------    ------------
               Net cash provided by financing activities ......................................        629,777         278,102
                                                                                                  ------------    ------------
Net decrease in cash and cash equivalents .....................................................        (27,611)         (6,086)
Cash and cash equivalents at  beginning of  period ............................................        103,728          68,366
                                                                                                  ------------    ------------
Cash and cash equivalents at end of period ....................................................   $     76,117    $     62,280
                                                                                                  ============    ============

</TABLE>
                                       6

<PAGE>

<TABLE>
<CAPTION>
R&G  FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                                                                                     Nine month period ended
                                                                                                          September 30,
                                                                                                  ----------------------------
                                                                                                      1999             1998
                                                                                                  ------------    ------------
                                                                                                         (Unaudited)
<S>                                                                                               <C>             <C>
Cash and cash equivalents include:
     Cash and due from banks ..................................................................   $     38,024    $     20,635
     Securities purchased under agreements to resell ..........................................         12,600           7,000
     Time deposits with other banks ...........................................................         25,493          34,645
                                                                                                  ------------    ------------
                                                                                                  $     76,117    $     62,280
                                                                                                  ============    ============


</TABLE>

        The accompanying notes are an integral part of these statements.

                                       7
<PAGE>
R&G FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  -         REPORTING ENTITY AND BASIS OF PRESENTATION

REPORTING ENTITY

         The accompanying  unaudited  consolidated  financial statements include
the accounts of R&G Financial  Corporation  ("the Company") and its wholly-owned
subsidiaries,  R&G Mortgage Corp. ("R&G  Mortgage"),  a Puerto Rico corporation,
and R-G Premier Bank of Puerto Rico (the "Bank"),  a commercial  bank  chartered
under the laws of the Commonwealth of Puerto Rico.

         R&G  Mortgage  is engaged  primarily  in the  business  of  originating
FHA-insured,  VA-  guaranteed,  and privately  insured first and second mortgage
loans on residential real estate. R&G Mortgage pools loans into  mortgage-backed
securities  and  collateralized  mortgage  obligation  certificates  for sale to
investors.  After  selling the loans,  it retains the  servicing  function.  R&G
Mortgage  is also a  seller-servicer  of  conventional  loans.  R&G  Mortgage is
licensed by the  Secretary of the Treasury of Puerto Rico as a mortgage  company
and is duly authorized to do business in the Commonwealth of Puerto Rico.

         The  Bank  provides  a  full  range  of  banking  services,   including
residential,  commercial and personal  loans and a diversified  range of deposit
products through twenty-one  branches located mainly in the northern part of the
Commonwealth  of Puerto Rico. The Bank also provides  private  banking and trust
and other  financial  services  to its  customers.  The Bank is  subject  to the
regulations  of certain  federal  and local  agencies,  and  undergoes  periodic
examinations by those regulatory agencies.

BASIS OF PRESENTATION

         The accompanying  unaudited consolidated financial statements have been
prepared in accordance with the instructions for Form 10-Q. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting principles.  However, in the opinion of management,  the accompanying
unaudited consolidated financial statements contain all adjustments (principally
consisting of normal recurring  accruals)  necessary for a fair  presentation of
the  Company's  financial  condition as of September 30, 1999 and the results of
operations  and  changes in its cash flows for the three and nine  months  ended
September 30, 1999 and 1998.

         The results of  operations  for the three and nine month  periods ended
September 30, 1999 are not necessarily  indicative of the results to be expected
for the year ending  December 31, 1999.  The  unaudited  consolidated  financial
statements  and notes  thereto  should be read in  conjunction  with the audited
financial statements and notes thereto for the year ended December 31, 1998.

         Certain  reclassifications (not affecting income before income taxes or
net  income)  have been made to the  consolidated  statements  of income for the
three  and  nine  month  period  ended  September  30,  1998 to  conform  to the
presentation for the 1999 respective periods.

                                       8
<PAGE>
BASIS OF CONSOLIDATION

         All  significant  intercompany  balances  and  transactions  have  been
eliminated in the accompanying unaudited financial statements.

NOTE 2  -         EARNINGS PER SHARE

         Basic  earnings per common  share for the three and nine month  periods
ended  September  30, 1999 and 1998 are computed by dividing net income for such
periods by the weighted  average  number of shares of common  stock  outstanding
during such periods.  Outstanding  stock options  granted in connection with the
Company's  Stock  Option Plan are  included in the  weighted  average  number of
shares for purposes of the diluted earnings per share computation.

         Per  share   information   for  all   periods   presented   takes  into
consideration  a 2 for 1 stock  split paid by the Company in the form of a stock
dividend in June 1998.


NOTE 3  -         INVESTMENT AND MORTGAGE-BACKED SECURITIES

         The  carrying   value  and  estimated  fair  value  of  investment  and
mortgage-backed  securities  by  category  are shown  below.  The fair  value of
investment securities is based on quoted market prices and dealer quotes, except
for the investment in Federal Home Loan Bank (FHLB) stock which is valued at its
redemption value.
<TABLE>
<CAPTION>
                                                   September 30,     December 31,
                                                       1999              1998
                                                   -----------       ------------
                                                   (Unaudited)
<S>                                                <C>               <C>
MORTGAGE-BACKED SECURITIES HELD FOR TRADING:
     CMO residuals and interest only strips        $       --        $  7,146,762
     GNMA certificates                              50,232,035        443,399,272
                                                   -----------       ------------
                                                   $50,232,035       $450,546,034
                                                   ===========       ============
</TABLE>

         Effective January 1, 1999, the Company  reclassified  $427.4 million of
mortgage backed securities from trading to available for sale in connection with
the adoption of SFAS 134. The adoption  resulted  principally  in an increase in
mortgage-backed  securities  available for sale and a corresponding  decrease in
mortgage-backed  securities held for trading.  In addition,  on July 1, 1999 the
Company reclassified $9.3 million of mortgage-backed  securities from trading to
available for sale.

                                       9

<PAGE>
<TABLE>
<CAPTION>
                                                                        September 30, 1999                  December 31, 1998
                                                                 -------------------------------------------------------------------
                                                                    Amortized            Fair           Amortized          Fair
                                                                      cost              value              cost            value
                                                                 -------------------------------------------------------------------
                                                                           (Unaudited)
<S>                                                               <C>               <C>               <C>               <C>
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE:

CMO residuals and other mortgage-backed securities .........      $ 19,699,980      $ 21,757,623      $  7,845,382      $  9,661,171
                                                                  ------------      ------------      ------------      ------------


FNMA certificates:
     Due from five to ten years ............................           798,278           784,309              --                --
     Due over ten years ....................................       112,947,234       112,764,038         8,091,335         8,161,704
                                                                  ------------      ------------      ------------      ------------
                                                                   113,745,512       113,548,347         8,091,335         8,161,704
                                                                  ------------      ------------      ------------      ------------
FHLMC certificates:
     Due from one to five years ............................           106,572           108,122            89,209            90,765
     Due from five to ten years ............................         1,300,751         1,283,909           240,394           244,140
     Due over ten years ....................................        16,227,230        15,902,068        21,368,689        21,723,711
                                                                  ------------      ------------      ------------      ------------
                                                                    17,634,553        17,294,099        21,698,292        22,058,616
                                                                  ------------      ------------      ------------      ------------
GNMA certificates:
      Due over ten years ...................................       534,081,324       531,917,599        55,158,840        55,158,840
                                                                  ------------      ------------      ------------      ------------

                                                                  $685,161,369      $684,517,668      $ 92,793,849      $ 95,040,331
                                                                  ============      ============      ============      ============

INVESTMENT SECURITIES AVAILABLE FOR SALE:

U.S. Treasury securities:
     Due within one year ...................................      $  4,997,266      $  4,953,905      $       --        $       --
     Due from one to five years ............................              --                --           4,995,028         4,990,625
                                                                  ------------      ------------      ------------      ------------

U.S. Government and Agencies securities:
      Due from one to five years ...........................       111,953,853       110,362,710        38,100,000        38,106,648
      Due from five to ten years ...........................        86,729,531        85,895,300         5,010,140         5,000,000
                                                                  ------------      ------------      ------------      ------------
                                                                   198,683,384       196,258,010        43,110,140        43,106,648
                                                                  ------------      ------------      ------------      ------------

FHLB  stock ................................................        23,024,367        23,024,367        11,404,867        11,404,867
                                                                  ------------      ------------      ------------      ------------
                                                                  $226,705,017      $224,236,282      $ 59,510,035      $ 59,502,140
                                                                  ============      ============      ============      ============
</TABLE>
<PAGE>
         Mortgage-backed  securities  available  for sale include  interest only
securities  with an amortized  cost of $10.0  million as of September  30, 1999,
which are primarily  associated  with the sale in prior years of  collateralized
mortgage obligations. These sales were not made in connection with the Company's
mortgage banking activities.






                                       10

<PAGE>
<TABLE>
<CAPTION>
                                                                         September 30, 1999                  December 31, 1998
                                                                   -----------------------------------------------------------------
                                                                    Amortized           Fair            Amortized           Fair
                                                                      cost              value             cost              value
                                                                   -----------------------------------------------------------------
                                                                            (Unaudited)
<S>                                                                <C>               <C>               <C>               <C>
MORTGAGE-BACKED SECURITIES HELD TO MATURITY:

GNMA certificates:
      Due from one to five years ...........................       $    18,532       $    19,875       $    27,227       $    29,201
      Due from five to ten years ...........................        11,146,170        10,865,108        13,024,960        12,751,640
      Due over ten years ...................................         2,155,746         2,099,487         2,359,713         2,306,529
                                                                   -----------       -----------       -----------       -----------
                                                                    13,320,448        12,984,470        15,411,900        15,087,370
                                                                   -----------       -----------       -----------       -----------

FNMA certificates:
     Due over ten years ....................................        10,594,199        11,007,091        12,607,700        12,944,020
                                                                   -----------       -----------       -----------       -----------

FHLMC certificates:
     Due over ten years ....................................           197,642           190,371           235,918           229,535
                                                                   -----------       -----------       -----------       -----------

                                                                   $24,112,289       $24,181,932       $28,255,518       $28,260,925
                                                                   ===========       ===========       ===========       ===========

INVESTMENT SECURITIES HELD TO MATURITY:

U.S.  Treasury securities:
     Due within one year ...................................       $      --         $      --         $   194,892       $   196,000
                                                                   -----------       -----------       -----------       -----------

U.S. Government and Agencies securities:
      Due within one year ..................................              --                --             204,167           204,167
                                                                   -----------       -----------       -----------       -----------

Puerto Rico Government and Agencies obligations:
       Due from one to five years ..........................           580,000           578,550              --                --
       Due from five to ten years ..........................         5,359,440         5,332,255         5,944,870         5,978,467
                                                                   -----------       -----------       -----------       -----------

                                                                     5,939,440         5,910,805         5,944,870         5,978,467
                                                                   -----------       -----------       -----------       -----------

                                                                   $ 5,939,440       $ 5,910,805       $ 6,343,929       $ 6,378,634
                                                                   ===========       ===========       ===========       ===========

</TABLE>
                                       11

<PAGE>
         NOTE 4  -          LOANS AND ALLOWANCE FOR LOAN LOSSES

          Loans consist of the following:
<TABLE>
<CAPTION>
                                               September 30,      December 31,
                                                  1999               1998
                                             ---------------    ---------------
                                               (Unaudited)
<S>                                          <C>                <C>
Real estate loans:
     Residential - first mortgage ........   $   965,279,663    $   735,457,756
     Residential - second mortgage .......        10,178,691         18,633,916
     Land ................................         1,375,468            337,250
     Construction ........................        66,810,770         34,391,170
     Commercial ..........................       190,137,256        121,393,030
                                             ---------------    ---------------
                                               1,233,781,848        910,213,122
Undisbursed portion of loans in process ..       (36,463,935)       (18,170,178)
Net deferred loan costs (fees) ...........          (486,977)          (166,056)
                                             ---------------    ---------------
                                               1,196,830,936        891,876,888
                                             ---------------    ---------------
Other loans:
     Commercial ..........................        51,532,825         46,532,311
     Consumer:
        Secured by deposits ..............        18,846,319         17,225,437
        Secured by real estate ...........        73,900,710         85,054,815
        Other ............................        39,009,140         41,381,304
Unamortized discount .....................          (346,751)          (163,499)
Unearned interest ........................          (102,189)          (183,546)
                                             ---------------    ---------------
                                                 182,840,054        189,846,822
                                             ---------------    ---------------

        Total loans ......................     1,379,670,990      1,081,723,710
     Allowance for loan losses ...........        (9,010,119)        (8,055,432)
                                             ---------------    ---------------
                                             $ 1,370,660,871    $ 1,073,668,278
                                             ===============    ===============
</TABLE>
<PAGE>
The changes in the allowance for loan losses follow:
<TABLE>
<CAPTION>
                                                           Nine months ended
                                                             September 30,
                                                       ------------------------
                                                        1999              1998
                                                       -------          -------
                                                              (Unaudited)
                                                           ($ in thousands)
<S>                                                    <C>              <C>
Balance, beginning of period .................         $ 8,055          $ 6,772
Provision for loan losses ....................           3,400            4,500
Acquired reserves ............................            --                363
Loans charged-off ............................          (3,039)          (4,501)
Recoveries ...................................             594              240
                                                       -------          -------
Balance, end of period .......................         $ 9,010          $ 7,374
                                                       =======          =======
</TABLE>



                                       12
<PAGE>
ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS
---------------------------------------------

FINANCIAL CONDITION

         At September  30, 1999,  the  Company's  total assets  amounted to $2.7
billion, as compared to $2.0 billion at December 31, 1998. The $609.0 million or
29.8% increase in total assets during the nine month period ended  September 30,
1999 was attributable to a $297.0 million or 27.7% increase in loans receivable,
net,  which reflects net  originations  following  repayments  and sales,  and a
$164.7 million or 276.9% increase in investment  securities  available for sale,
which is the result of the purchase of $175.8 million of such securities  during
the period.  In addition,  the Company had a $189.2 million or 34.7% increase in
mortgage-backed  securities  available for sale and held for trading,  which are
attributable   to  increased   mortgage   loan   originations   and   subsequent
securitizations during the period.

         The increase in the Company's assets were primarily funded by increased
deposits of $262.9 million or 26.1%,  by a $152.5 million or 126.0%  increase in
FHLB  advances,  and by a $201.5  million or 42.7%  increase in securities  sold
under agreements to repurchase.

         At September 30, 1999, the Company's  stockholders'  equity amounted to
$245.4  million,  which is an increase of $24.3 million or 11.0% from the amount
reported at December 31, 1998.  The primary  reason for the increase was the net
income  earned for the nine month period  ended  September  30, 1999,  which was
partially  offset by a $3.3 million  decrease in unrealized  gains on securities
available for sale,  net of income tax  benefits,  and $5.8 million in dividends
paid during the period.  At September 30, 1999,  the Bank's  leverage and Tier 1
risk-based  capital  amounted  to 6.66% and  11.82% of  adjusted  total  assets,
respectively,  compared to a 4.0% minimum requirement,  and its total risk-based
capital amounted to 12.67%, compared to an 8.0% minimum requirement.

RESULTS OF OPERATIONS

         The Company  reported  net income of $10.1  million and $ 33.1  million
during the three and nine months period ended September 30, 1999, as compared to
$8.5 million and $24.0 million during the prior comparable periods.

         Total  revenues  for the nine month  period  ended  September  30, 1999
amounted to $90.6  million  compared to $67.6  million for the prior  comparable
period. The 34.0% increase was due to an increase in net interest income of $9.0
million or 27.8% during the nine months ended  September 30, 1999 over the prior
comparable  period,  primarily  due to a $20.1  million  or  31.1%  increase  in
interest income on loans,  primarily  associated with an increase in the average
balance of the outstanding loan portfolio.

         Contributing  to the increase in revenues  during the nine month period
ended  September  30, 1999 was a $4.2  million or 17.2%  increase in net gain on
origination  and  sale  of  loans,   which  reflects   increased  mortgage  loan
originations  during the 1999 period,  primarily  associated  with the Company's
expansion  of  its  existing  branch  network  during  fiscal  year  1998.  Loan
administration and servicing fees also increased by $7.7 million or 68.6% due to
an increase in the Company's loan servicing portfolio. Service charges, fees and
other also increased by $950,000 or 23.4%,  due mainly to an increase in banking
fees  associated  with an increased  number of deposit  accounts during the 1999
period, and other fees due to an expanded customer base.

         Total  revenues for the quarter  ended  September  30, 1999 amounted to
$31.4 million,  a $7.0 million or 28.8% increase over the comparable  quarter in
1998.  The  increase in total  revenues  during the 1999  quarter was  primarily
attributable to a $4.1 million or 34.7% increase in net interest  income,  and a
$2.8 million or 76.6% increase in loan administration and servicing fees.

                                       13
<PAGE>
         Total  expenses  increased  by $13.4  million or 38.9%  during the nine
months ended September 30, 1999 over the prior comparable  period.  The increase
during  the nine month  period in 1999 was due  primarily  to a $4.5  million or
37.3% increase in employee compensation and benefits,  due to an increase in the
number of  employees as a result of new branch  openings,  and  increased  bonus
payments  associated with increased loan production during the 1999 period.  The
increase  in  employee  expenses  was  accompanied  by a $7.2  million  or 43.7%
increase  in other  miscellaneous  expenses,  mainly as a result  of a  $967,000
increase in advertising  costs, and other expense  increases  associated with an
increase in loan production and general growth in the Company's  operations.  In
addition the Company had a $3.0 million increase in amortization expenses of the
Company's servicing asset,  primarily  associated with the purchase in late 1998
of a $1.1  billion  servicing  portfolio  from  another  financial  institution.
Finally,  occupancy  expenses  increased by $1.8  million or 28.9%,  mainly as a
result of the operation of six additional  branches completed during fiscal 1998
and three additional branches completed during the 1999 period.

         Total  expenses  increased  by $5.5  million or 45.4%  during the three
month period ended September 30, 1999. The increase was due to a $2.0 million or
47.9%  increase  in  employee  compensation  and  benefits,  a $678,000 or 30.7%
increase in occupancy  expenses,  and a $2.8 million or 49.4%  increase in other
miscellaneous expenses.  These expenses increased during such three month period
for the same reason as noted above for the nine month period in 1999.

         Total income tax expense decreased by $21,000 or 0.6%, and increased by
$461,000  or 5.1% during the three and nine month  period  ended  September  30,
1999,  respectively,  over the prior comparable periods. The Company's effective
tax rate  amounted to 27.2% and 22.4%,  respectively,  during the three and nine
months periods ended September 30, 1999, compared to 30.9% and 27.5% in the 1998
comparable periods.  The decrease in 1999 of the Company's effective tax rate is
primarily  attributable  to an  increase  in  the  Company's  exempt  securities
portfolio.

LIQUIDITY AND CAPITAL RESOURCES

         LIQUIDITY  -  Liquidity  refers to the  Company's  ability to  generate
sufficient  cash to meet the  funding  needs of  current  loan  demand,  savings
deposit withdrawals, principal and interest payments with respect to outstanding
borrowings and to pay operating expenses.  It is management's policy to maintain
greater  liquidity  than  required  in order to be in a  position  to fund  loan
purchases and originations,  to meet withdrawals from deposit accounts,  to make
principal and interest  payments with respect to  outstanding  borrowings and to
make  investments  that take  advantage of interest  rate  spreads.  The Company
monitors its liquidity in accordance with guidelines  established by the Company
and  applicable  regulatory  requirements.  The Company's  need for liquidity is
affected  by loan  demand,  net  changes  in deposit  levels  and the  scheduled
maturities of its borrowings.  The Company can minimize the cash required during
the times of heavy loan demand by modifying its credit  policies or reducing its
marketing  efforts.  Liquidity  demand caused by net  reductions in deposits are
usually  caused by factors  over which the  Company  has  limited  control.  The
Company derives its liquidity from both its assets and liabilities. Liquidity is
derived  from  assets  by  receipt  of  interest  and  principal   payments  and
prepayments,  by the  ability to sell assets at market  prices and by  utilizing
unpledged  assets as  collateral  for  borrowings.  Liquidity  is  derived  from
liabilities by  maintaining a variety of funding  sources,  including  deposits,
advances from the FHLB of New York and other short and long-term borrowings.

         The  Company's  liquidity  management  is  both a daily  and  long-term
function of funds management. Liquid assets are generally invested in short-term
investments  such as securities  purchased under  agreements to resell,  federal
funds sold and certificates of deposit in other financial  institutions.  If the
Company requires funds beyond its ability to generate them  internally,  various
forms of both short and long-term  borrowings  provide an  additional  source of
funds.  At  September  30,  1999,  the Company had $180.0  million in  borrowing
capacity  under  warehousing  lines of  credit,  $404.2  million  in  borrowings
capacity  under a line of  credit  with the FHLB of New York and  $25.0  million
under federal  funds lines of credit.  The Company has generally not relied upon
brokered deposits as a source of liquidity,  and does not anticipate a change in
this practice in the foreseeable future.

                                       14
<PAGE>
         At  September  30, 1999,  the Company had  outstanding  commitments  to
extend  credit  totaling  $59.8  million.  Certificates  of  deposit  which  are
scheduled to mature  within one year  totaled  $695.2  million at September  30,
1999,  and  borrowings  that are  scheduled  to mature  within  the same  period
amounted to $970.5 million. The Company anticipates that it will have sufficient
funds available to meet its current loan commitments.

         CAPITAL RESOURCES - The FDIC's capital regulations  establish a minimum
3.0  %  Tier  I  leverage   capital   requirement  for  the  most   highly-rated
state-chartered, non-member banks, with an additional cushion of at least 100 to
200  basis  points  for  all  other  state-chartered,  non-member  banks,  which
effectively will increase the minimum Tier 1 leverage ratio for such other banks
to 4.0% to 5.0% or more. Under the FDIC's  regulations,  the highest-rated banks
are  those  that  the  FDIC  determines  are not  anticipating  or  experiencing
significant  growth and have well diversified risk,  including no undue interest
rate risk exposure,  excellent asset quality, high liquidity, good earnings and,
in general,  which are  considered a strong banking  organization  and are rated
composite 1 under the Uniform Financial Institutions Rating System.  Leverage or
core  capital  is defined  as the sum of common  stockholders'equity  (including
retained earnings), noncumulative perpetual preferred stock and related surplus,
and minority interests in consolidated subsidiaries, minus all intangible assets
other  than  certain  qualifying  supervisory  goodwill  and  certain  purchased
mortgage servicing rights.

         The FDIC also requires that banks meet a risk-based  capital  standard.
The  risk-based  capital  standard for banks  requires the  maintenance of total
capital (which is defined as Tier I capital and supplementary  (Tier 2) capital)
to risk  weighted  assets  of 8%. In  determining  the  amount of  risk-weighted
assets, all assets,  plus certain  off-balance sheet assets, are multiplied by a
risk-weight of 0% to 100%,  based on the risks the FDIC believes are inherent in
the type of asset or item.  The  components of Tier 1 capital are  equivalent to
those discussed above under the 3% leverage capital standard.  The components of
supplementary   capital  include  certain  perpetual  preferred  stock,  certain
mandatory  convertible  securities,  certain  subordinated debt and intermediate
preferred stock and general allowances for loan and lease losses.  Allowance for
loan and lease  losses  includable  in  supplementary  capital  is  limited to a
maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted
toward  supplementary  capital cannot exceed 100% of core capital.  At September
30, 1999,  the Bank met each of its capital  requirements,  with Tier 1 leverage
capital, Tier 1 risk-based capital and total risk-based capital ratios of 6.66%,
11.82% and 12.67%, respectively.

         In addition, the Federal Reserve Board has promulgated capital adequacy
guidelines for bank holding companies which are  substantially  similar to those
adopted by FDIC regarding state-chartered banks, as described above. The Company
is currently in compliance with such regulatory capital requirements.

INFLATION AND CHANGING PRICES

         The  unaudited  consolidated  financial  statements  and  related  data
presented  herein  have been  prepared in  accordance  with  generally  accepted
accounting  principles,  which require the measurement of financial position and
operating  results  in terms of  historical  dollars  (except  with  respect  to
securities which are carried at market value),  without  considering  changes in
the relative  purchasing power of money over time due to inflation.  Unlike most
industrial  companies,  substantially  all of the assets and  liabilities of the
Company  are  monetary  in  nature.  As a  result,  interest  rates  have a more
significant  impact on the  Company's  performance  than the  effects of general
levels  of  inflation.  Interest  rates  do not  necessarily  move  in the  same
direction or in the same magnitude as the prices of goods and services.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995

         In addition to historical information,  forward-looking  statements are
contained  herein that are subject to risks and  uncertainties  that could cause
actual results to differ materially from those reflected in the  forward-looking
statements.  Factors  that  could  cause  future  results  to vary from  current

                                       15
<PAGE>
expectations, include, but are not limited to, the impact of economic conditions
(both  generally  and more  specifically  in the  markets  in which the  Company
operates),  the impact of government  legislation and regulation  (which changes
from time to time and over which the  Company has no  control),  and other risks
detailed in this Form 10-Q and in the Company's  other  Securities  and Exchange
Commission ("SEC") filings. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof.  Readers should carefully review the risk factors  described in
other documents the Company files from time to time with the SEC.

ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------  ----------------------------------------------------------

         Quantitative  and  qualitative   disclosures  about  market  risks  are
presented at December 31, 1998 in Item 7A of the Company's Annual report on Form
10-K.  Management  believes there have been no material changes in the Company's
market risk since December 31, 1998.

                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1:  Legal Proceedings

                  The  Registrant  is  involved  in  routine  legal  proceedings
                  occurring in the  ordinary  course of business  which,  in the
                  aggregate,  are believed by management to be immaterial to the
                  financial   condition   and  results  of   operations  of  the
                  Registrant.

ITEM 2:  Changes in Securities

                  Not applicable

ITEM 3:  Defaults Upon Senior Securities

                  Not applicable

ITEM 4:   Submission of Matters to a Vote of Security Holders

                  Not applicable

ITEM 5:  Other Information

         On October 7, 1999 the Company  completed its  acquisition by merger of
Continental  Capital Corp.,  Huntington  Station,  New York  ("Continental"),  a
mortgage  banking  company.  Continental  is one of the  largest  single  family
residential  mortgage  loan  originators  in  Suffolk  County,  New York and the
largest  FHA/VA  mortgage  loan  originator in the New York  metropolitan  area,
originating  $340  million  of loans in 1998.  In  addition  to its  origination
business, Continental engages in loan servicing and as of September 30, 1999 its
loan servicing portfolio equaled $496.3 million.

ITEM 6:  Exhibits and Reports on Form 8-K

                  a) Exhibits

                     NO.
                     ---
                     27   Financial Data Schedule

                              E-1

                  b) No Form 8-K reports were filed during the quarter.

                                       16
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                     R&G FINANCIAL CORPORATION

Date: November 5, 1999               By: /S/ VICTOR J. GALAN
                                         ---------------------------------------
                                            Victor J. Galan, Chairman
                                            and Chief Executive Officer
                                            (Principal Executive Officer)



                                     By: /S/ JOSEPH R. SANDOVAL
                                         ---------------------------------------
                                            Joseph R. Sandoval
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)